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  • Support and resistance

Breakouts and the close

A breakout is a candle closing beyond the far edge of a support or resistance zone. The close starts the breakout; the next candles staying beyond the zone strengthen it. Saying which timeframe's close you measure it on is part of the reading.

Resistance zone Close inside the band: only a test Close above the far edge: breakout Follow-through
The orange band marks the resistance zone and the orange dots the candles' closes. The close inside the band is only a test; the close above the upper edge starts the breakout.

What is a breakout?

A breakout of a resistance zone is measured by a candle closing above the zone's upper edge. At a support zone the measure is a close below the lower edge. Either way, the edge that counts is the zone's far edge, seen from the direction price came from.

A close inside the band is not a breakout but a test. A wick that reaches beyond the zone and comes back before the close does not count either; that case is covered on the false breakout page.

How to measure a breakout

  1. Draw the zone as a band. Mark both edges of the zone and note the far edge, based on which side price is coming from.
  2. Choose the timeframe of the close. You can measure a breakout on the 1H, 4H or daily close. State the timeframe you chose up front.
  3. Wait for the candle to close. A candle that has not closed yet can still change shape. Price that moves beyond the zone within a candle can come back by the close.
  4. Look at the next candles. Whether price stays beyond the zone after the close shows how far the breakout has been accepted.

Follow-through

A single close beyond the far edge is the start of a breakout, not its outcome. Follow-through is the next candles closing beyond the zone too, and price moving away from it.

The further from the zone the breakout candle closed, and the more the next candles moved on without coming back to the zone, the clearer the breakout reads. If the close sits just beyond the far edge and the next candles slip back into the band, the breakout stays weak.

After the close

When a candle closes above a resistance zone's upper edge, the next candles can draw different pictures.

Follow-through

The next candles close above the zone and price moves away from it. The breakout reads as accepted.

Back into the zone

The next candles return into or below the band. The breakout loses its validity and, looking back, can turn into a false breakout.

Retest

After moving away, price comes back down to the broken edge. The question is whether the zone now acts as support.

Which timeframe's close?

The same move looks different on different timeframes. The 1H chart may show two or three closes above the zone; on the 4H chart those same hours sit inside one candle, which may close inside the zone. A higher timeframe's close comes later, but it covers more price action.

Crypto trades 24/7, so candle close times depend on the exchange and the chart settings. The daily candle often closes at 00:00 UTC, but not everywhere. Saying clearly which close you are looking at avoids confusion when judging a breakout.

What it shows, what it does not prove

What it shows

  • That price was able to close beyond the zone on this timeframe
  • Together with the next candles, whether prices beyond the zone were accepted
  • That the zone's role may have changed (resistance acting as support)

What it does not prove

  • That price will keep moving in the breakout's direction
  • How long the move will last or how far it will go
  • That the zone has broken on other timeframes too

The MarketLevelMap view

How it relates to zones

Measuring a breakout requires reading the zone as a band. A close beyond the band's near edge shows price entering the zone; a close beyond its far edge shows the zone being cleared. Closes in between show the zone still being tested.

A broken zone does not disappear from the chart. If price later returns to the same band, the zone can be read as an area where a reaction may come from the other side.

Often confused with

For general information only. Not investment advice.Last updated: