GLOSSARY // Day Trading
Breakdown
A breakdown is the bearish mirror of a breakout: price falls through a support level that held on multiple prior tests, and the selling continues instead of bouncing. The buyers who defended that floor are done, and everyone who bought against it is now underwater.
The mechanics compound the move. Sell stops cluster just under obvious support, so the first tick below the level triggers a wave of market sells into thinning bids. On any bounce, the broken level tends to act as resistance, because trapped longs sell into strength just to get out flat.
A stock holds $45.00 four times across two sessions. On the fifth test it slices to $44.80 as 800,000 shares print in three minutes, then bleeds to $43.60 within the hour. Shorts who entered the break at $44.90 cover into $43.75; the bounce dies at $44.95, five cents under the old floor.
Related terms
Educational only — not financial advice. Definitions simplified for clarity; markets are messier than definitions.