Breakout
Technical analysisA decisive close beyond an established support or resistance level.
In plain terms
Only credible with a volume surge. Without one it is usually a trap.
1492 terms
Glossary
Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
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Breakout trading
Technical analysisBuying a decisive close beyond a consolidation range, on the expectation that compression resolves into a directional move.
In plain terms
The volume filter is the strategy. A breakout on below-average volume is a thin order book making a big-looking move that gets handed straight back.
Failed breakout
Technical analysisAlso called: Bull trap
A break beyond a level that closes back inside soon afterwards.
In plain terms
Everyone who bought the break is trapped, and forced exits move price harder than willing ones.
False breakout
Technical analysisA move beyond a level that fails and reverses back inside it.
In plain terms
Stops cluster just past obvious levels, which makes them a tempting pool of liquidity.
Cup and handle
Technical analysisA rounded U-shaped base followed by a small, shallow drift near the rim, before a breakout above it.
In plain terms
The roundness is the whole point. It shows a gradual handover from impatient sellers to patient buyers, rather than a panic low that may still be retested.
Measured move
Technical analysisProjecting the height of a chart pattern from its breakout point to set a target.
In plain terms
Not a prediction — a way of asking before you enter whether the reward justifies the risk.
Turtle trading
Technical analysisAlso called: Turtle traders
The 1983 trend-following system taught by Richard Dennis to a group of novices, built on Donchian breakouts.
In plain terms
Proof that the entry rule is the least important part of a system. The sizing and the pre-set stop did the real work.
Choppy market
Technical analysisAlso called: Range-bound market
A market oscillating without net progress, typically with ADX below about 20.
In plain terms
Every breakout fails. Signals still fire; they simply do not follow through.
Confirmation
Technical analysisRequiring a second condition — volume, a close, a retest — before entering.
In plain terms
Waiting for a retest feels prudent and removes the strongest breakouts, which never retest.
Donchian channel
Technical analysisA band drawn from the highest high and lowest low of the last N bars.
In plain terms
The most mechanical level on any chart — nothing to interpret and no way to see a breakout because you wanted one.
No demand
Technical analysisA move on unusually low volume, suggesting no real participation behind it.
In plain terms
The move had no fuel. Common just before a failed breakout.
Point and figure
Technical analysisA chart type that plots columns of rising and falling boxes, ignoring time entirely and recording only price moves larger than a chosen box size.
In plain terms
Clean very-long-term structure and unambiguous breakouts, at the cost of the same box-size arbitrariness as Renko. Little used now.
Random walk
Technical analysisAlso called: Random walk hypothesis
A price series generated purely by chance, in which each step is independent of the ones before it.
In plain terms
Plot 250 coin flips and you get trends, levels, breakouts and a passable head and shoulders. Chart readers cannot reliably tell one from a real series — which is why "it looks like a clean setup" is not evidence.
Value area
Technical analysisThe price range containing roughly 70% of a session’s activity.
In plain terms
Inside it the market is balanced. Accepting prices outside it is what a real breakout looks like.
Volume
Technical analysisThe number of shares traded in a given period.
In plain terms
The only widely used input that is not derived from price, which makes it worth more than the four oscillators sitting under your chart. A breakout without a volume surge is a suspect breakout.