Rectangle Pattern

What the Rectangle pattern means

Buyers and sellers trade control inside a clear band, with neither able to push price out of the range. The pattern is direction-neutral until the breakout. It often continues the trend that led into it, but it can also mark a reversal.

How the Rectangle is traded

• →Trade the breakout: a close above resistance is bullish, a close below support is bearish.
• →The target is roughly the height of the range projected from the breakout.
• →Range traders can also buy support and sell resistance inside the box with tight stops.
• →Wait for a real close outside the box, not just a wick, to avoid false breaks.

Common mistakes

• ✕Assuming a direction before the box actually breaks.
• ✕Treating a single wick beyond the level as a confirmed breakout.