A price characteristic relative to resistance and support levels, and can be used by traders to determine suitable entry points or limit their losses.
A breakout is a useful analytical component of price trends used to assess the probability that the price of an asset will continue to increase or decrease. This trend characteristic is often represented as a line representing the price of an asset between two other lines called resistance and support levels. When the price trend breaks out of the resistance area, this generally indicates an increase in the perceived valuation of the asset. However, when the price line dips below the support level, it can be assumed that asset valuation is very low.
Breakouts help traders determine when the best time is to invest in a particular asset or exchange them for other assets to reduce their losses.