Valid Breakout

28/09/2010 08:43

 When a level was acting as stiff resistance prior to breakout, it should have turned to support once it had been cleared. But despite a one-day drop under this level and was quickly pushed higher means that the move respected this area as support. The low that was on pullback should now be watched. Any drop under this level could mean a breakout failure.

A stock when experienced a pullback to test support near breakout area - At this point, an objective view would have to state that it cleared a resistance level, set a higher high and then held the breakout area on its first test. This implies that the breakout is valid and ultimately, only a break under this breakout week low will negate that notion.