Breakout trading is one of the trading methods used by many traders in trading. One of the most important things for a breakout trader is to distinguish between strong and weak breakouts. Because weak breakouts are often false breakouts.

There are many trading techniques that help traders to identify strong breakouts. However, most of them have the following characteristics:

Do not retest the previous broken price

Usually, strong breakouts will not return to retest the previous broken price area, but usually it will go in the direction of the breakout. As shown below, Tesla stock (TSLA) has such breakouts. In addition, you can check stocks such as APHA, FLGT, ROKU, ... also have many strong breakouts.


Trading volume is above average for the week

This is important for a strong breakout. Strong breakouts will usually be accompanied by strong volume increases. If a breakout has no confirmed volume, it is most likely a fake breakout.

As shown above, you can also see that this breakout happened to be confirmed with a spike in volume, much higher than the previous trading days. So it can be confirmed that this is a strong breakout.

Price breaks the top or bottom first

The next sign to identify a strong breakout is for the price to either break the previous high to make a higher high or break the previous low to make a lower low. As the chart above is also an example. Or you look at the chart below, the market broke the support with strong momentum, no retest and made a new lower low:

In addition to the above factors, we can rely on a few other signs such as: price closes strongly near the top or bottom of the week, price breaks out of a sideways price zone after a long time, ... are all characteristics of a strong breakout.

When identifying strong breakouts will help traders determine the trading strategy to apply to be able to make a profit and not miss an opportunity to trade in the market.

Please note that a strong breakout should have all of the above, if one element is missing there is a high chance of a pullback to retest the breakout or even a false breakout.