A range breakout occurs when a stock trades between a defined support and resistance zone for a period of time and then finally moves above the resistance or below the support with strong momentum and volume. This breakout indicates that the market has decided a new direction after consolidation. When price breaks above the range resistance, it signals potential bullish momentum as buyers gain control, while a breakdown below support indicates bearish pressure from sellers. Traders often watch for confirmation through volume and follow-through price movement to avoid false breakouts.