The Rectangle is one of the most popular and easy patterns that is used in the technical analysis. Though being a rather simple pattern, it is a quite important and strong figure that is a very obvious sign of a trend continuation. After noticing it, a trader gets an opportunity to place a potentially profitable order.

In other words, the Rectangle signals a sort of a pause in a trend, indicating price consolidation before a jump towards the unfolding trend. This pattern is formed when the market is trading sideways.

The pattern looks similar to another figure of the technical analysis – the Flag. However, the Rectangle has horizontal support and resistance lines, and there is no flagpole in it. Prices move inside the pattern between two parallel lines. Two vertical lines can be drawn in order to complete the figure, but it is not necessary as they do not play any significant role.

It is important to pay attention to the fundamental components. Formation of the Rectangle often precedes publication of some important news the result of which is hard to be predicted. If the published data coincides with forecasts, then prices usually move with the previous bias.

It often happens that prices break in the direction of the previous trend. That is why the Rectangle is defined as a continuation pattern. However, sometimes prices break the pattern and move in the opposite direction. In that case the Rectangle becomes a reversal pattern. It may happen after macroeconomic statistics do not match forecasts.

It is quite easy to distinguish the Rectangle on a chart. It looks as a small trading channel or a sideways trend. The figure indicates that bears and bulls reached parity. Until a support or resistance line is broken, the Rectangle signals continuation of a trend.

If the Rectangle appears in the bullish market, then prices break upwards and such a figure is called the Bullish rectangle. If it occurs in the bearish market and prices break downwards, then the figure is called a bearish Rectangle.

Actual patterns

Bearish Rectangle
was formed on 11.03 at 07:09:00 (UTC+0)
signal strength 3 of 5

According to the chart of M30, AUDUSD formed the Bearish Rectangle. This type of a pattern indicates a trend continuation. It consists of two levels: resistance 0.6289 - 0.0000

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Bullish Rectangle
was formed on 07.03 at 01:25:15 (UTC+0)
signal strength 3 of 5

According to the chart of M30, SILVER formed the Bullish Rectangle which is a pattern of a trend continuation. The pattern is contained within the following borders: the lower border

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Bullish Rectangle
was formed on 06.03 at 22:30:31 (UTC+0)
signal strength 3 of 5

According to the chart of M30, #MSFT formed the Bullish Rectangle. This type of a pattern indicates a trend continuation. It consists of two levels: resistance 402.06 and support 393.53

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