Forex Dictionary Terms

Trend Breakout

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Definition – What does Trend Breakout mean?

A trend breakout refers to a movement in a currency pair’s price action that is significantly above or below the short or long-term trendline. If the movement is sustained, a trend breakout marks the end of the existing trend. The direction and strength of the breakout also gives clues as to what new trend will be established.

ForexTerms explains Trend Breakout

When most traders refer to a breakout, they are referring to a point where support or resistance has been breached. Trend breakouts are more significant in that they are points of transition in a currency pair’s price action trend. If a currency pair has generally been trending up long-term, a sustained swing downwards would represent a trend breakout and suggest that something in the pair has changed to weaken and possible reverse the trend. As with all technical tools, the frequency of trend breakouts depends heavily on a trader’s timeframe.

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