Glossary / Trend & momentum

Breakout

A breakout describes price moving beyond a level that had previously contained it — a prior high, a prior low, or the boundary of a range price had been oscillating inside. The word names the event, not a prediction about what follows it.

How it is measured

How is breakout measured?

Define the containing level first: a recent range high or low, a multi-week high, or a horizontal level price has repeatedly turned at. The move past that level is then dated to the session that closed beyond it. Because the containing level is drawn by whoever is looking, two traders can date the same event differently.

Why it matters

Why does breakout matter to a swing trader?

The concept matters mostly as vocabulary and as a scan category: a large share of retail scanners are organised around it. The measurement problem worth knowing is that the containing level is chosen rather than derived, and that a move past a level is confirmed only after the session it happened in. Volume and the wider trend are what most traders check alongside it, because a move past a level on thin participation looks identical to one on heavy participation until the volume is examined.

Related

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Related terms

Momentum
Momentum describes the speed and persistence of a security's recent price movement.
Relative volume
Relative volume compares the volume traded in a session to that same security's own average volume over a recent window, expressed as a multiple.
Volume
Volume is the number of shares that changed hands over a period.
Trend
A trend describes the direction price has generally travelled over an extended window, and how consistently it has travelled that way.

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General information about market vocabulary, written to be descriptive rather than prescriptive. Not investment advice — see the risk disclosure.