A range breakout occurs when the price of a stock moves outside a well-defined sideways zone (range) where it has been trading between a support (lower level) and resistance (upper level) for a period of time. This breakout indicates that the balance between buyers and sellers has shifted—if price breaks above resistance, it suggests strong buying momentum and potential for an upward move, while a break below support signals increasing selling pressure and possible downside. Traders often look for increased volume during the breakout to confirm its strength and avoid false signals, as genuine breakouts usually lead to sharp directional moves after consolidation.