Breakout Entries

A breakout entry buys a stock as it clears a well-formed base or tight range on strong volume. Here is how swing traders plan one, and how they handle failed breakouts.

The setup

A base is a stretch of sideways trading after an advance, where the stock digests its gains. The top of that range is the pivot, the price that sellers have defended. When the stock pushes through the pivot on heavy volume, it signals that demand has overwhelmed that supply. The breakout entry buys right there.

A base, a pivot at the top of the range, and a breakout on rising volume.

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