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
Flat Boundaries. Look for a horizontal support line and a matching resistance line.
Multiple Touches. Price often tests both sides several times.
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.
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