A rectangle forms when price bounces between flat support and flat resistance, usually as a pause inside a trend.
Trading options
- Inside: buy support, sell resistance (range trading).
- Breakout: trade the close beyond the box, usually in the direction of the prior trend.
- Target: the height of the rectangle, projected from the breakout.
Wick says
Rectangles are the market's waiting room. Someone eventually gets called in. Usually the trend.
Key takeaways
- Flat top, flat bottom, sideways price.
- Usually a continuation pattern.
- Target = rectangle height.