Breakout & pullback
A breakout is a close above resistance or below support, ideally on higher volume. A pullback is the return of price to the broken level, which then often switches roles: former resistance becomes support.
Breakout or false breakout?
- Close, not intraday: a breakout counts on a close beyond the level, not on a brief spike.
- Volume: volume clearly above average shows real participation.
- Context: a breakout in the direction of the trend has better odds than one against it.
Two ways to enter
On the breakout: you are in early, but false breakouts hit you more often. On the pullback: you wait for price to return to the broken level and hold it. The stop can sit just below the level, which improves the risk-reward, but some strong breakouts never pull back.
Frequently asked questions
What is a false breakout?
Price moves beyond a level and quickly falls back inside the range, often on low volume. Traders who bought the breakout are then caught.
How far does a pullback go?
Often back to the broken level or the rising EMA20. A close back inside the old range is a warning sign.
See it in the screener
The live demo shows every term with example data, right next to the score and its reasons.