A breakout occurs when the price moves decisively above a resistance level or below a support level, often accompanied by increased volume or momentum. Breakouts signal the start of a new trend or the acceleration of an existing one. False breakouts — where the price briefly breaches a level then reverses — are a common risk, so traders often wait for confirmation before entering.
Gold (XAU/USD) has been trading between $2,300 and $2,350 for two weeks. The price suddenly surges above $2,350 with strong momentum. Breakout traders enter long positions, targeting a move to $2,400 based on the range width.
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