In this article, We learn about "Breakdown".Let's Go!
A breakdown is a breakout to the downside.
Price trades sideways for a while but it is unable to garner the strength to move higher. When this happens, it signals buyer weakness.
A breakdown happens when there is a breakout downward through support.
The buyers who used to be at this level are gone, but there is still selling pressure.
Price that breaks downwards through a support level is expected to continue to fall.
This is considered a sell signal. Especially if volume is also increasing.
If the price has fallen significantly since the break, a better price can be achieved by waiting for a reaction back.
Please note that price in an uptrend often triggers false sell signals on breakdowns through support.
If you want to learn more foreign exchange trading knowledge, please click: Trading Education.
