just piercing of resistance should not be read as a bona fied breakout. many breakout are fake breakout that fade away and retrace. some even venture further away only to retrace to retest the resistance level.
as always with the business of investment and technical analysis there are no hard and fast rules, but the following parameters may help:
- the extent of penetration
- duration of the breakout
- is volume present
- where do the indicators lie
one of the most reliable confirmations is when a stock had retrace to retest breakout level and bounces from the latter level.
