This sometimes called the Popcorn Function, since if you look at a picture of the graph, it looks like kernels of popcorn popping. (Also called the Thomae's Function.)
To prove it is discontinuous at any rational point, you could argue in the following way: Since the irrationals that are in $(0,1)$ are dense in $(0,1)$, given any rational number $p/q$ in $(0,1)$, we know $f(p/q) = 1/q$. But let $a_{n}$ be a sequence of irrationals converging to $p/q$ (by the definition of density). Then $\lim \limits_{a_{n} \to (p/q)} f(x) = 0 \neq f(p/q)$. Thus, $f$ fails to be continuous at $x = p/q$.
Now, to prove it is continuous at every irrational point, I recommend you do it in the following way:
Prove that for each irrational number $x \in (0,1)$, given $N \in \Bbb N$, we can find $\delta_{N} > 0$ so that the rational numbers in $(x - \delta_{N}, x + \delta_{N})$ all have denominator larger than $N$.
Once you have the result from above, we can use the $\epsilon-\delta$ definition of continuity to prove $f$ is continuous at each irrational point.
So, first prove 1. (It's not too hard.) Once you've done that, you can accomplish 2. in the following way:
Let $\epsilon > 0$. Let $x \in (0,1)$ be irrational. Choose $N$ so that $\frac{1}{n} \leq \epsilon$ for every $n \geq N$ (by the archimedian property).
By what you proved in 1., find $\delta_{N} > 0$ so that $(x - \delta_{N}, x + \delta_{N})$ contains rational numbers only with denominators larger than $N$.
Then if $y \in (x-\delta_{N}, x + \delta_{N})$, $y$ could either be rational or irrational. If $y$ is irrational, we have $|f(x) - f(y)| = |0 - 0| = 0 < \epsilon$ (since $f(z) = 0$ if $z$ is irrational).
On the other hand, if $y$ is rational, we have $y = p/q$ with $q \geq N$. So $|f(x) - f(y)| = |0 - f(y)| = |f(y)| = |1/q| \leq |1/N| < \epsilon$, and this is true for every $y \in (x-\delta_{N}, x + \delta_{N})$.
Thus, given any $\epsilon > 0$, if $x \in (0,1)$ is irrational, we found $\delta > 0$ (which was actually $\delta_{N}$ in the proof) so that $|x - y| < \delta$ implies $|f(x) - f(y)| < \epsilon$.