Breakout Strength Analysis

A collection of vocabulary terms related to breakout strength analysis in trading, including definitions for key concepts and characteristics of strong breakouts.

Breakout

A price movement that occurs when the price breaks above a resistance level or below a support level.

Strong bars

Bars that are large and indicate strong buying or selling pressure.

Closing at extremes

For a bullish breakout, closing in the top 5-10% of the range; for a bearish breakout, closing in the bottom 5-10%.

Wick size

The length of the wick relative to the body of the candle; minimal wicks indicate strength.

Tick gaps

Small price gaps between consecutive bars indicating momentum direction; in a bullish breakout, there are higher lows.

Volume spike

A significant increase in volume that confirms the strength of a breakout.

Average True Range (ATR)

A measurement of market volatility used to confirm breakout significance.

Retest

A situation where the price pulls back to a key level after a breakout, testing its reliability.

Higher time frame confirmation

Ensuring that the breakout aligns with trends observed in larger time frames, increasing the likelihood of success.

Market structure confirmation

Assessing key levels that are broken or re-tested to confirm the validity of a breakout.