Breakout is defined as the movement of a stock price:

• A. A movement of a stock price into a trading range.
• B. Out of an established trading range either above resistance or below support.
• C. A sudden drop to new lows due to bad news.
• D. A gradual average following a moving average.

Answer: (B)

Breakout means price moves out of an established trading range, breaking through the level of resistance on the upside or through the level of support on the downside. When price decisively clears those bounds, the previous range is considered broken and a new trend may begin. This definition matches the correct choice, since it describes leaving the defined between-range area rather than staying inside it.

Why this fits best: a breakout captures the moment the price escapes the confines that have held it in, signaling potential momentum in the direction of the break. Traders often look for the breakout to be confirmed with higher volume or a close beyond the boundary to distinguish it from a false move.

For context, other ideas describe different phenomena: moving into a trading range means the price is consolidating inside bounds rather than escaping them; a sudden drop to new lows due to bad news is a sharp move that could be a breakout but is described by the cause and result rather than the general concept of breaking out of a range; and following a moving average is about trend or smoothing, not breaking out of a defined range.