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Technical AnalysisB
Breakdown
A breakdown occurs when the price of a security moves below a defined support level, typically accompanied by increased trading volume. This signals that sellers have overwhelmed buyers at that level and further downside may follow. Breakdowns are the bearish counterpart to breakouts and are often used as short-selling signals or triggers to exit long positions. Traders watch for confirmation through sustained price action below the broken level and elevated volume to distinguish genuine breakdowns from bear traps.
Example
“The stock broke down below the $50 support level on heavy volume, triggering stop-loss orders and accelerating the decline to $44.”