Breakout

A breakout takes place when lines of support or resistance become ignored and the price in the graph searches for new lines of lines of resistance and support.

 Breakout

A breakout is a significant event in a pair; when traders realise that it is in the process of taking place, they try to take advantage of the movement by trading it. Consequently, the price moves quickly. It is an art, or should I say science, to know when to take advantage of a breakout.

The problem is identifying when a breakout has actually taken place. News can cause breakouts, but one has to be careful because news can cause great swings that only appear to be a breakout and ultimately go nowhere. Sometimes the momentum of a price move can make it  ’breakout’ of its lines of resistance/support, but only temporarily.