A breakout occurs when price moves beyond an identified support or resistance level, trading range, or chart-pattern boundary. The word often refers to an upward move through resistance; in broader usage it covers either direction, with a downward breakout commonly called a breakdown.
Moving beyond a boundary
Suppose a token has repeatedly traded between 20 and 24. A move above the resistance area near 24 is a possible upward breakout. That boundary is an analytical reference, not a physical barrier, and different chart timeframes or trading venues may show different levels.
Traders sometimes distinguish a brief wick beyond the boundary from a candle closing outside it. They may also examine volume, subsequent price action, and whether a return to the old boundary holds. These are evaluation methods, not universal conditions that guarantee a successful trade.
Continuation is uncertain
A breakout can extend an existing trend or begin a different one. It may also fail, with price returning inside the earlier range and potentially trapping traders who followed the move.
Price does not have to revisit the broken level before continuing. Conversely, a retest that initially holds can later fail. The breakout label alone supplies neither a reliable price target nor the identity or motives of market participants.