By Roberto PedoneWINDERMERE, Fla. ( Stockpickr) -- The breakout chart pattern to the upside is one of my absolute favorite things to look for when trading. When a stock breaks above a previous price it had struggled with, it means that the sellers have lost control and the buyers have taken over. Market players can see some gigantic gains as momentum players and technical traders pile into a stock that is pushing into new territory. But don't get me wrong: False breakouts occur all the time, with a stock trading above a previous resistance level and then plunging instead of heading higher. This is why it's important for investors to stay open-mined and be prepared for anything. Markets are always changing, and investors need to adopt and change with them. If a false breakout occurs, you have to be prepared to change your trade or have a sound stop strategy in place to protect yourself from unwanted losses. What exactly is a breakout? Basically, it's when a stock makes a move through a significant level of support or resistance, which is usually followed by heavy volume and increased volatility. Wall Street players love to see upside breakouts because it demonstrates strength in the underlying asset as the price breaks above a level of previous resistance. An upside breakout can also take a stock to a new high that will generate a lot of interest as the stock shows up on sophisticated software that scans for this type of action. Here 's a look at a number of stocks that could be setting up to become great breakout candidates.
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