StockSignal
Breaking Support
Story type: Diagnostic
Price appears to be at support, but the structure suggests potential failure. Long-term support position shows price near cycle lows while volume breakout indicates expanding activity and drawdown from peak is severe.
State
Apparent support test with structural breakdown
Emergence
Price appears to be testing support but breakdown characteristics are present. When long-term support position indicates price is near lows but volume breakout shows expanding activity and drawdown is severe, the apparent support test may be a breakdown in progress rather than a bounce opportunity.
Limits
This story identifies structural discrepancy, not breakdown confirmation. It does not claim support will fail, predict further decline, or indicate timing. Support levels can hold even with breakdown characteristics present.
Explanation
This diagnostic clarifies a common misreading: Surface reading: Price at support represents a buying opportunity as support typically holds. Structural reality: Long-Term Support Position shows price near important support levels. However, Volume Breakout indicates unusual volume expansion—often associated with breakdowns. Drawdown from Peak is severe—the decline has been substantial. The combination reveals that apparent support test may have breakdown characteristics where support fails rather than holds, turning opportunity into trap.
Interpretation
This story identifies structural discrepancy between support appearance and breakdown risk reality. It does not predict support failure, recommend avoiding, or time the outcome. It clarifies that support tests and breakdowns can look similar initially.
Required Signals
support-10-3to5y
How close price is to 3-to-5-year support (10% band)
volume-breakout
Current period volume relative to historical average volume
drawdown-from-peak
Percentage decline of current price from recent peak