Technical Glossary / Support, Resistance & Price Levels
Breakdown
A close beyond support that had been containing price.
Teaching sketch. It shows the shape, not a live quote and not a trade signal.
Definition
A breakdown is the downside mirror of a breakout. Price closes under a floor: range support, a prior swing low, or a pattern boundary. The old demand did not hold on that close.
How to identify it
A pre-marked level and a close beneath it. A wick that reclaims the level before the close is a test or a sweep, not a breakdown, if your rule uses closes.
Bullish reading
A breakdown that closes back above the level is a failed breakdown. That failure is a long setup for some traders, because the stops under the floor were taken and price did not stay there.
Bearish reading
Selling a breakdown means selling weakness, with risk back above the level or above the breakdown bar. A pullback to the broken floor is the patient entry and it may not arrive.
Common mistakes
Treating every touch under support as a breakdown, including the ordinary noise at the edge of a zone.
Limitations
Downside breaks can waterfall, so the "wait for the retest" entry often never fills. They can also spring straight back. Both outcomes are common. The stop is what makes the trade finite.
This note explains the term. A sketch shows the shape of the idea. Neither is a recommendation, a signal, or a comment on any security. Indicator settings and exchange conventions differ. Check the live chart and the contract specification before you use a number.