By Roberto PedoneWINDERMERE, Fla. ( Stockpickr) -- If you're looking for a trading pattern that can lead to big profits, then you need to take a look at the breakout chart pattern. A breakout chart pattern indicates either a rise in a stock's price above a resistance level, which is usually marked as the stock's previous high, or a drop below a support level, usually its previous low. This trend-trading strategy tries to isolate the strongest and weakest stocks in any market. What exactly does a breakout mean for a security? Basically, a breakout is when a stock makes a move through an identified level of support or resistance, which is usually followed by heavy volume and increased volatility. Wall Street traders love to see upside breakouts because it demonstrates strength in the underlying asset as the price breaks above a level of previous resistance. A breakout can also take a stock to a new high that will generate a lot of interest as the stock shows up on websites and scanning software used by the most active traders. Here 's a look at a number of stocks that could be setting up to become great breakout plays. A breakout below a support level is usually seen as a warning sign for a security. This is simply because when a stock breaks support that has held up for a significant amount of time, it could mean that the strong holders of the shares have given up and dumped their positions.
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