A resistance is an area where price growth has stopped once or several times, without ever being able to overcome it. We can define it as a real obstacle. So if the company is able to overcome (breakout) this obstacle, after being stopped previously, the chances of the price continuing to rise increase. Furthermore, prices are more likely to continue rising, the stronger the underlying positive trend.

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

As shown in the chart above, Fiverr International Ltd. (FVRR) was reported in the “Potential Breakout: 4 Interesting Stocks To Watch” article of June 18, 2020 as a company with a potential breakout within a few days. Already on June 25 Fiverr has made the breakout and since June 18 it has grown by + 24%.

The potential 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” potential breakout because often the cause is natural temporary volatility (given by the retest of the signal level or profit taking or general market crash).