DEFINITION of 'Rectangle'

A pattern formed on a chart where the price of a security is trading within a bounded range in which the levels of resistance and support are parallel to each other, resembling the shape of a rectangle. This pattern signals that the price movement, which has stalled during the pattern, will trend in the direction of the price breakout of the bounded range.


The bounded range, or rectangle, is a period of consolidation in which market participants are generally indecisive. The formation of this pattern will see the price of the security test the levels of support and resistance several times before a breakout. Once the security breaks out of the range, in either direction, it is considered to be trending in the direction of the breakout.

  1. Consolidation

    In technical analysis, the movement of an asset's price within ...
  2. Support (Support Level)

    The price level which, historically, a stock has had difficulty ...
  3. Resistance (Resistance Level)

    A chart point or range that caps an increase in the level of ...
  4. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  5. Pattern

    In technical analysis, the distinctive formation created by the ...
  6. Channel

    1. The system of intermediaries between the producers, suppliers, ...
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