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Breakdown

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Last Updated on: 13th February 2021, 09:12 am

A breakdown is a breakout to the downside. A breakdown happens when there is a breakout downward through support. The buyers who used to be at this level are gone, but there is still selling pressure.

Price trades sideways for a while but it is unable to garner the strength to move higher. When this happens, it signals buyer weakness.

breakdown

The price that breaks downwards through a support level is expected to continue to fall. This is considered a sell signal. Especially if the volume is also increasing.

If the price has fallen significantly since the break, a better price can be achieved by waiting for a reaction back.

Please note that price in an uptrend often triggers false sell signals on breakdowns through support.

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