Clowboy,
This is only my opinion, but…
It’s a breakout because the price jumped above the top line I had drawn across the previous peaks.
Prices have a tendency at times to be bounded by straight lines, sometimes horizontal lines and sometimes sloping lines. That gives rise to the various patterns that technical analysts often talk about (resistance, support, triangles, flags, pennants, etc). There are “crowd” explanations for all these patterns (ie. what’s happening between buyers and sellers), but of course none are totally reliable. They’re just indications of points of higher probability, although many breakouts also fail and quickly reverse direction again.
In this case, the downsloping top line formed a resistance level, albeit a descending one with time. The general idea is that at this level there was enough selling volume to prevent the price going higher. It would rise to that level, get pushed down by the sellers, rise again to nearly the same level, get pushed down again, and so on until all the volume for sale around that price had been bought. Then, with no more volume for sale at that price, the price broke through that resistance level and pushed on up. This indicates that ultimately there was more buying pressure than selling, but it took a while for all the volume at the resistance level to get bought up. From a T/A point of view, top-side breakouts indicate a good possibility of further price rises, especially if accompanied by relatively high volume.
In GUD’s case, the volume was not particularly high when it first broke my line, but today’s was much higher as it pushed well clear of the line. Who knows where it will go from here, but I’ll hold until I get a sell indication.
Attached is another example from a stock I hold. I bought when it first broke the top line, after which it retreated back under the line but is now poking back up again. I have reasonable hopes for this given that the third bottom didn’t reach right down to the bottom line and this last dip only got down to $1.20. Again, no guarantees of anything, but I think the signs are positive.
As I said, all just my own interpretation, but hopefully it helps.
Cheers,
GP
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