Buy Break

A type of recommendation to buy an asset once the price is able to surpass an influential level of resistance. A move above resistance is used as a buy signal because an increase in upward momentum often follows the breakout. Buying a break is a strategy often used by traders who incorporate the use of chart patterns, trendlines and other technical indicators into their trading.

For example, suppose a stock appears to have met resistance at the $50 price level for the last year. Many traders will watch the price movement around $50 very closely because a break above the resistance would suggest that a likely surge higher will follow. Technical traders use a break above resistance to signal a good opportunity to buy because a resulting surge of upward momentum commonly follows.


Investment dictionary. . 2012.

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