A channel breakout happens when a stock price moves outside a defined price channel formed by parallel support and resistance trendlines. If the price breaks above the upper channel line with strong volume, it signals bullish momentum and the possibility of a fresh uptrend. If it breaks below the lower channel line, it may indicate weakness and the start of a downtrend. Traders often watch channel breakouts because they can mark the end of consolidation and the beginning of a strong directional move, but confirmation through volume, candle closing, or retest is important to avoid false breakouts.