Stock Breakout Example, Frontline FRO

The following stock chart of Frontline (FRO) offers a great example of a breakout.

Stock Breakouts are a basic form of technical analysis spotted when a series of resistance points create a distinguishable pattern (cup with handle, W pattern, etc. to name a few). Once the stock moves out of this resistance it is known as a “breakout” and is also an entry point for investors to buy shares and go long.

Note: this chart of Frontline (FRO) stock is a seven month daily chart:

1. The blue “1?s show us how Frontline (FRO) found distinctive resistance around the $45 price area. The purple “1” then shows us where FRO finally broke this resistance and had its original stock breakout. The stock moved up roughly 50% over the next two months.

2. The blue “2?s show us how Frontline (FRO) found new resistance around $67 a share. The purple “2” shows us where FRO gapped above this new resistance area to hit all time highs.

3. The purple “3? is symbolic because as we can see this new breakout failed as the stock collapsed back into its previous base. This is a very strong signal for traders to sell out of their positions and step away from the stock altogether.

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