"Breakout" is a very popular term used by traders and technical analysts all the time.
Let me explain this price action behaviour in a very simple language -
Imagine a situation - "Bird is in the cage".
Now, it's not difficult to guess what a bird can do inside a cage. There is very limited movement bird can make. That's what happens with a stock that is caged for a long period of time. Let's take one example - Here's the stock inside the cage - The boundary is at 27 and stock fails to move past it
And then one day...something happens and the bird is set free. What happens - Bird flies in the open air and sky becomes the limit. In Technical parlance...it's called Breakout. The stock is ready to fly higher.
The same logic applies to stocks when they move past the caged boundary. They fly like a bird and this is how the Breakout looks on the chart
In Science of stock price action - one of the things we learn - How to monitor stocks as they break the cage live and are ready to fly higher in Premium Case Studies section. I define it as experiential learning.
Breakout has been very rewarding strategy in last few months. Here are few stocks I covered as part of learning exercise and they all have done very well, thanks to great market condition.
Science of Stock Price Action
"Personally, I'm always ready to learn, although I do not always like being taught." -- Winston Churchill
The best learning comes from experiential learning. It is with this objective - I have developed "Science of Stock Price Action" Video Book. It's a combination of concepts and then its application in real life situations. The idea is to test how concepts work and why sometimes they don't.
If you find my work interesting - I will encourage you to buy the book and access Premium Case Studies. The idea is to demonstrate live how patterns unfold and work. They succeed, they fail but the whole process is real fun. I invite you to be part of it.
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Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers