Confirmation/Failure = Follow-thru or lack thereof. Traders have differing ways of confirming the validity of trends and breakouts. For instance in a breakout from a trading-range you might first look at certain criteria w/in the trading-range, then certain criteria on the breakout of the range, then certain criteria on the initial pullback following the bo to confirm or refute your analysis so far. (Chart analysis should be a cumulative, evolving process, the last bar is part of the whole and the sum of those parts are indeed greater than the individual bar. Having said that, as traders we also recognize that price can indeed turn on a dime, a bar, which is why god gave us stops, money-management, and common sense.) So say price breaks out of strong resistance on wide spreads closing on the highs on strong volume, then the pullback is a shallow retracement of the previous leg on narrow spreads closing on their highs on contracting vol. This would seem to confirm the breakout. But if it immediately drops back well into the range on high vol and wide spreads closing on the lows on a deep or complete retracement, this may be failure; the bo may have just been an upthrust, a fakeout, a squeeze, whatever you want to call it. These are of course, principles, not patterns, and there are infinite variations. But basically, if a trader waits for confirmation, it usually means he's looking to take a position after the trend has proved its previous apparent strength according to his criteria.
I say "usually" because one may take a position earlier, w/in the trading-range, following, say, a shakeout, or a test of a shakeout. It depends upon one's trading style and risk tolerance and skill at reading the market and confidence. In a shakeout of a trading-range, price drops below the low which has been well-established by the range and then recovers. The break may be shallow, it may be deep, it may be on high or low vol. Obviously shallow on low vol is more positive than deep on high vol. But whichever, price then recovers to rally back into the range, the sooner the better, then continues to rally enough to show strength, demand. So there is no follow-thru on that breakdown of support, that's failure of supply to gain control, at least for now. It may mean price is ready to bo or it may indicate further consolidation, in which case we may not really know what is happening yet w/in the range - accumulation or distribution - until there is some kind of confirmation one way or the other.
Buying on the shakeout itself is the greatest risk, as there's the least confirmation, but the highest potential reward; buying on the test of the shakeout involves less risk (more confirmation) but less reward; buying on the pullback after the bo, the least risk, the least reward. And so on...
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LOL.
Wisdom is profitable to direct