A breakout in the stock market, or a breakout in a particular share, is a tradable event that certain active investors may use to build an entire trading strategy around. A breakthrough occurs when a company or stock index rises above or falls below a level of support or resistance that it struggled to break above or below in a previous trading session. Having an understanding of how to discover and trade breakout stocks provides traders with another weapon with which to create gains in an often volatile market. Breakout stocks are displayed on price charts, in particular candlestick charts, which can be used to interpret market movement.

A breakout in the stock market refers to a significant and decisive upward or downward movement in the price of a security, typically accompanied by increased trading volume. It signifies that the price has breached a key level of support or resistance, often triggering a surge in buying or selling activity. Breakouts are essential technical analysis patterns and are closely monitored by traders and investors.

In an upward breakout, the stock surpasses a resistance level, indicating potential bullish momentum and prompting traders to enter long positions. Conversely, a downward breakout occurs when the price falls below a support level, suggesting potential bearish sentiment and prompting traders to consider short positions.

Successful identification of breakouts involves analyzing price charts, trendlines, and key support/resistance levels. Traders often use breakout strategies to capitalize on price movements and anticipate trend reversals or continuations in the stock market.