Rectangle Chart Pattern Video Lecture | Chart Pattern Trading: Learn the Fundamentals - Business Basics

good afternoon everyone this is
Christian with perfect stock alert calm
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please refer a friend or I'll hit you in
the face with a brick what I can't I
can't say that today we'll be looking at
the rectangular chart pattern this is
both a continuation signal as well as or
can be a continuation signal as well as
a reversal signal most cases are a
continuation however in this particular
case we're looking at a bullish one but
you can see them and on the bearish and
downtrend as well so keep that in mind
this particular pattern doesn't have a
bullish or bearish bias when you're
forming it it's just neutral you don't
actually know which way is going to
break until it does in this particular
case whenever you draw these out you
must have at least two points two high
points to draw one of these out if you
draw a straight line across those two
points and they line up and then you
possibly have a rectangle forming the
support line would be the same way you
got to have at least two points to draw
it out but if you draw out the trend
line and it's you know doesn't have a
upward slope or a positive slope or
negative slope then you're looking at a
rectangle chart pattern this is also
known as a trading range consolidation
phase congestion area many different
terms for it but basically price
activity is just bouncing off resistance
bouncing off support bouncing off
support resistance just continuously
doing this and it can go on for weeks or
months you don't know which direction is
going to go until it breaks out this is
not one of those that you get an idea of
which direction it's going it can be
bullish and it can be bearish so you
rather than guess just wait let price
activity tell you when price activity
moves up above the in this case when it
moves up above the resistance line
closes above that then you knew which
direction was going to go you'd like to
see good volume on the breakout doesn't
have to be there but it's preferred the
volume during the actual consolidation
phase it could be many different ways
don't pay a lot of mind to that
sometimes guys will try to read the
volume that's going on there to get
kind of a clue as to which direction is
going to break but that is not always a
science either should be noted when
trading this particular pattern you're
looking for the opportunity when you
have to break out to be a buyer there
some cases you'll have move up and then
it'll pull back down in this case it
would have possibly pulled back down to
touch that previous resistance line
right here and you'll find in many cases
that it will act as support you will
bounce right off of that and continue
moving higher that can be a secondary
entry opportunity on long side for that
particular set up if it was a bearish
set up you might have a getaway where it
broken out here came back up and tested
that previous of course if it was not
acting as resistance and then moved
lower again okay let me clean this chart
up you can get a target for how high you
expect price to go from the breakout I'm
not a big fan of doing that and with
this particular chart pattern but it's
in coordinate textbooks there you go you
can measure the distance between you two
parallel lines add that to the breakout
and that's a target for how high you
expect it to go obviously it was a way
off base in this particular chart
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