Breakdown

A Breakdown consists of a price movement through a support level, usually with heavy volume. Technical traders will sell the security short when a price breakdown occurs as it is likely that additional selling pressure will follow.

Breakdown

A Breakdown consists of a price movement through a support level, usually with heavy volume.


Breakdown Identification

Breakdowns are easily detected on Point & Figure charts as illustrated below.

Point and Figure chart showing a price breakdown

Interpretation of Breakdown

Technical traders will sell the security short when a price breakdown occurs as it is likely that additional selling pressure will follow.

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