Breakout
A move through support, resistance or a range boundary, often with a pickup in volatility.
In practice
USD/JPY ranges between 149.50 and 150.50 through the Asian session, then breaks above 150.50 at the London open with a wide candle. Breakout traders buy the move or a retest of 150.50.
Common mistake
Buying every poke above a level. Many breakouts fail, especially during quiet hours.
Related terms
False breakout
A move through a level that quickly reverses back inside. False…
Support
A price area where buying has previously stopped a decline. Once…
Resistance
A price area where selling has previously stopped a rally. Once…
Asian range
The high and low set during the quieter Asian session. Some…
Breakout trading
Entering as price breaks out of a range or pattern, expecting…
Buy stop
A pending order to buy above the current price, used to enter on…