Breakout Trading and Breakout Patterns: How Often Breakouts Hold

A breakout is a close beyond a level that price had failed to pass before: above a resistance, such as a previous swing high or the top of a pattern, or below a support for a breakdown. Traders buy upside breakouts on the idea that the level held back buyers and, once cleared, the move will continue. We tested that idea on five years of the S&P 500 ETF: most breakouts above a swing high closed back below it within two weeks, and the month after a breakout was no better than an average month.

What counts as a breakout

A breakout needs a level and a rule for crossing it. The level can be horizontal (a swing high, the top of a range), sloped (a trendline, covered in trading a trendline breakout), or the border of a chart pattern such as a triangle or a rectangle. The crossing rule matters as much: a high above the level during the day is not a close above it. On this page:

• Resistance is a swing high, a high above the highs of the 5 bars on each side. It exists only once those 5 later bars have printed, so it is known without hindsight, 5 bars late.
• Breakout is the first daily close above a resistance that has not been broken yet. One close can clear several levels at once; it counts as one breakout.
• Failure is a close back below the level within the next 10 sessions. When one close clears several levels, failure is a close back through the nearest one.

Six breakouts, and what came after each

The chart has six breakout closes between July and October 2026. Four of them closed back below the level within two days. The table follows each one for 20 sessions, with dividend-adjusted closes, all in 2026.

The first row is the hardest case. By our rule it failed, closing back under the level the next day and down to a close of 727.65 on July 29, 3.4% below the breakout; twenty sessions after the breakout the ETF was 2.43% above the breakout close anyway. A breakout can fail and the market still go up, and it can hold and the market still go down, like the August 4 one. Six cases show how breakouts behave, not how often they work; for that we need the full five years.

Five years of breakouts on the S&P 500 ETF

We applied the same rules to every daily bar of the ETF from January 4, 2021 to October 28, 2026 (swing highs and lows are taken from the same period only, so no level from before 2021 counts) and compared each breakout with the base rate: the return over 20 sessions from every day of the period, breakout or not.

On this market and period, buying a breakout above a swing high gave the same 20-session result as buying on any day: the breakout added nothing on its own. The breakouts that held for 10 sessions did better, a median of +3.47% after 20 sessions against +0.54% for those that failed, but that split is only known after the fact; on the day of the breakout, nobody knows which group it belongs to.

Breakdowns were worse. Of 43 closes below a swing low, 40 closed back above it within 10 sessions, and a short sale at the breakdown close lost a median 3.03% over the next 20 sessions, counted as (entry − exit) / entry. The period includes the 2022 decline, but it rose overall, which is the background every short faced.

How to avoid false breakouts

The usual advice comes in six forms. Here is what each one does, and what our data can and cannot say about it.

• Wait for the close. A high above the level is not a breakout until price closes there. Every breakout on this page is a close, and 58.8% of them still failed, so the close is a minimum, not a filter that solves the problem.
• Look for volume. A breakout on heavy volume shows more participants behind the move. On the ETF, the 47 breakouts on volume below the average of the previous 20 sessions failed 31 times, 66%; the 21 on above-average volume failed 9 times, 43%. That difference is a hint on 21 cases, not a result, and only 2 of the 68 breakouts came on volume of 1.5 times the average or more. Compared by median, the volume of failed and held breakouts was close, 0.91 and 0.98 times the average: the split above depends on where the line is drawn. The volume panel below shows it for the six breakouts of the chart: the two that held came on 1.25 and 1.43 times the average, but the September 21 breakout came on 1.24 times and failed two days later.

• Wait for a retest. Some traders buy only when price comes back to the level and holds. We counted a retest when, within 10 sessions of the breakout and before any close back below the level, a session's low came within half a 14-day average true range (as of the previous close) of the level while that session still closed above it, and bought at that session's close, as drawn below. On the ETF, 48 of the 68 breakouts were retested, most of them the next day, and 26 of those 48 still closed back below the level later. Twenty sessions after entry, the retest entries had a median of +2.12%, against +2.35% for buying the same 48 breakouts at once. That gap is too small to favor either entry; what waiting did change is that it skipped 20 breakouts, 14 of which had already closed back below the level.

• Check the higher timeframe. A daily breakout against a weekly downtrend fights the larger trend. We did not test this filter.
• Do not chase. Buying several percent above the level puts the stop far away. The size of the position should come from the distance to the stop; see position size.
• Prefer breakouts from a consolidation. A level tested several times inside a tight range is what chart patterns formalize. Their results on our bench are below.

Which line breaks in each chart pattern

A chart pattern is a consolidation drawn with lines, and its breakout is a close beyond one of them. The drawing below shows that line for eight common patterns; the table adds the others, the direction the textbook expects, and how the breakouts actually went on daily charts, as each pattern page of this site reports them (statistics updated November 5, 2026).

Two textbook directions did not hold on our daily data: only 42.4% of ascending triangle breakouts went up, and only 32.3% of descending triangle breakouts went down. That lean comes first from the shape: on random prices, the same rules already break up only 36% to 37% of the time for the ascending triangle and down only 39% to 42% of the time for the descending one. Against that reference, both triangles broke up a little more often than random prices, as the two triangle pages explain. A breakout in the expected direction is also not an edge by itself; each pattern page compares what followed with random bars of the same assets and measures the excess return over the rest of the market.

A "breakout candlestick" is not a named pattern: traders mean the candle that closes beyond the level. A long candle that closes near its extreme, such as a marubozu, is read in classical analysis as a breakout with conviction. On our bench, across all markets on daily charts, the white marubozu moved the expected way after 10 bars 52.7% of the time against 54.2% at random, and the black marubozu 44.4% against 45.9%. The bench compares a marubozu with random bars; it does not test one sitting on a level, so these figures do not say whether the candle adds anything to a breakout.

Breakout chart patterns on our bench

Pattern breakouts are breakouts of a specific kind of level, drawn from a consolidation. Our bench detects each pattern with a fixed rule on many markets and compares it with random entries, as explained in our methodology. A breakout that reverses into a loss is covered in bull trap, which counts traps with a different rule, a new recent high that fails within a few sessions, hence different counts.

For the rectangle, not every breakout gives a closed trade: 2,934 trades closed on the 2,981 upward breakouts, and 2,175 on the 2,386 downward ones, as the rectangle page details.

For the levels themselves, see support and resistance; more guides are in technical analysis.