This term is mentioned often as a stock is rallying in penny stock land, so what is a blue sky breakout? A blue sky breakout happens when a stock breaks through all previous resistance marks. After the stock breaks out it takes some time to recognize its new trading ceiling and to know where its downward resistance support will establish itself. When a blue sky breakout is occuring, short sellers are not willing to take a position because they are unsure of where the stock will bounce back down from.
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