Daily fresh breakouts

What are Breakouts In the Stock Market?

Breakout refers to a unique price level of shares; when crossed, these shares experience a significant trend reversal. Simply put, a breakout in the stock market occurs when a share breaches its resistance or support levels and, consequently, moves into an opposite trend compared to the current one.

For example, a stock is moving in an upward price trend and is trading at Rs 100 per share in the market.  It has resistance levels at Rs 120, and after 2 hours, the stock breaches its resistance levels and moves to Rs 140. This price level indicates that the stock has experienced a breakout, and there is a chance that it can be sustained at the price level of Rs 140 and above for a certain period.

The above example showcases a general working of the breakouts in the stock market. However, breakouts are much more complicated and must be approached carefully.

• Breakouts refer to price levels at which stocks cross their resistance or support levels and are ready for a trend reversal.
• These breakouts help traders and investors to buy and sell shares on time thus avoiding potential losses.

What are Daily Fresh Breakout Stocks?

Since we have a gist of breakouts in the stock market, let us now understand daily breakout stocks. As we know, trading in the stock market depends primarily on the risk tolerance levels of an individual; therefore, traders use different strategies and time frames for trading in listed equity shares.  These time frames vary from minutes to hours to daily and even weekly.

To identify daily fresh breakout stocks, day traders, also known as intraday traders, use shorter time frames such as a minute or hourly. Basically, daily breakout stocks are those shares that enter breakout zones on daily charts on a trading day. This means these shares move above or below their respective resistance and support zones based on the daily time frame, eventually forming a daily fresh breakout.

• Daily fresh breakout stocks are equity shares that experience breakouts on daily charts. 
• Daily breakout stocks are tracked extensively by intraday traders in the share market.

How to Identify Daily Fresh Breakout Stocks?

To identify daily fresh breakout stocks, you must use the daily charts in combination with the technical indicators, such as relative strength index (RSI), golden cross indicators or volume oscillators. Each of the mentioned indicators and the price action immensely assists traders in identifying daily breakout stocks.

Overview of Technical Tools to Identify Daily Fresh Breakouts?

Relative Strength Index (RSI) - Relative strength index (RSI) is a technical indicator that measures the intensity of speed and momentum of a stock price. RSI is represented through a line graph whose value oscillates on a scale of 1 to 100. It assists traders in analysing whether a stock is moving towards a price correction or upward trend.

Moving Averages (MAs) - Moving averages are another important technical indicator formed based on a stock's average price over the previous trading sessions. The 50-day and 200-day moving average are two of the most commonly used MAs. These averages are used simultaneously to identify daily breakout stocks based on a golden or death cross formation.

Risk of Investing in Daily Breakout Stocks?

Volatility Risk - Since daily breakout stocks are tracked over daily charts, the prices of these stocks tend to fluctuate drastically during the trading session and may lead to losses.

False Breakouts - Often, traders have to deal with daily false breakout signals in the stock market. These signals create challenges for traders to identify daily breakout stocks and earn returns from trend reversals.

Emotional Trading - Emotional trading refers to trading in the stock market based on emotions. It refers to a situation when traders take entry and exit in daily breakout stocks based on their feelings, which can lead to extensive losses.

Key Takeaways On Daily Fresh Breakout Stocks

• Daily fresh breakout stocks are those stocks that have reached or surpassed their pivot levels on daily charts.
• Day or intraday traders use daily breakouts to trade stocks with potential trend reversal opportunities.
• With technical indicators such as the Golden Cross and RSI, traders can identify daily breakout stocks on the daily charts.
• Daily breakout stocks offer return-generating opportunities; however, they are equally risky, so traders must proceed cautiously while trading in them.