What Does a Fake Breakout Tell You?

Breakouts occur at resistance and support areas. These areas could be based on trendlines—horizontal or diagonal—prior highs or lows in the price, or chart patterns drawn on the chart.

A breakout is when the price moves through a support or resistance level and keeps moving in that direction. A failed breakout is when the price moves through a support resistance level, but then fails to continue moving in that direction and instead reverses course.