7.11What is a breakdown?
1What is it?
A breakdown is when price falls below support convincingly.
2Why does it exist?
It suggests sellers are in control and a further fall may follow.
3Diagram
4Quick revision
- Close below support.
- Often a signal to exit longs.
- Can also be false.
5Knowledge check
Q1. Breakdown means price falls below what?Show answer
Support.
Q2. What might an investor do on a breakdown?Show answer
Review the position; consider exiting per their plan.
Q3. Can a breakdown be false?Show answer
Yes.