Rectangle

A Rectangle forms when price bounces between a flat support level and a flat resistance level. This sideways range can last for a while. When price finally breaks out—up or down—it can spark a decent move.

How to Identify

1. Flat Boundaries. Look for a horizontal support line and a matching resistance line.

2. Multiple Touches. Price often tests both sides several times.

3. Volume. Tends to be choppy until the breakout.

How to Use

• Entry: many traders wait for a confirmed break above or below the rectangle.

• Stop: place stops just inside the range in case price snaps back.

• Target: measure the rectangle’s height (distance between support and resistance) and project that from the breakout point.

Pro Tips

• Beware of fakeouts. Price might poke above or below, then shoot back in.

• Combine with other signals like momentum or trend analysis.

• If volume pops on the breakout, it often boosts follow-through.

Exercise

Review past charts for a sideways range. Draw lines at support and resistance. Imagine trading a breakout in either direction, placing a stop just inside the range.

Advance the chart to see if price reaches your projected target or reverses. Repeat with different symbols to note variations.