Trendline Breakout

A trendline breakout occurs when the price of an asset moves through a previously established trendline, signaling a potential shift in momentum. A trendline connects a series of highs or lows and serves as a visual representation of the trend's support or resistance.

When the price breaks this line, it suggests that the underlying trend is weakening or ending. Traders often use breakouts as entry or exit triggers.

To be valid, a breakout should ideally be accompanied by an increase in volume, which confirms the conviction of the market participants. False breakouts can occur, which is why traders often wait for a retest of the broken line before confirming the new direction.

It is a fundamental tool for trend-following strategies.