A trendline is a line that combines a series of minimum or maximum to identify the presence of a trend. The trendline indicates a positive trend if it combines a series of increasing minimums, while indicates a negative trend if it combines a series of decreasing maximums.

If the company is in a medium-long term positive trend (increasing lows for several weeks or months) and shows a short-term negative trend (decreasing highs for days or weeks), the trendline breakout of this negative short-term trend increases the probability that the company will start growing again to follow the positive medium-long term trend.

So, within this article you will find companies that have breakout a short-term negative trendline and have increased their chances of resuming the positive medium-long term trend.

Below is a chart of a company that appeared in a “Trendline Breakout” article here on BullDude.com.

As shown in the chart, Shopify Inc (SHOP) breakout an important trendline on April 13, 2020, reported in the article published on the same day “3 Stocks Breakout a Trendline Today”. Since that day Shopify (SHOP) has grown by more than + 130% in just 3 months. The other 2 stocks included in the article were Domino’s Pizza (DPZ) which grew by + 8% in the same period of time and Kirkland Lake Gold (KL) which grew by + 23%.

The breakout is defined as “false” when the positive trend that supported the price growth reverses the direction (going from positive to negative). To understand when this event occurs, there is a red half-line in the chart that indicates the level below which the positive trend can be considered concluded.

A few negative days are not enough to call it a “false” breakout because often the cause is natural temporary volatility (given by the retest of the signal level or profit taking or general market crash).