DEFINITION of 'Rectangles'

A technical trading pattern in which a security's value ranges between two horizontal price points, creating a rectangle on a trader's screen. Rectangles occur in situations where a security is consistently bought up, when a lower price value is established, and sold down, when an upper value is similarly established. These price values remain "hard" values for a definite period, which is what creates the rectangular pattern.

BREAKING DOWN 'Rectangles'

Often rigid trading patterns, such as rectangles, are associated with well-informed investors buying and selling a security. Large price movements in one direction or another are not uncommon, when either the upper or lower limits of the rectangle's pattern are broken. Novice traders would be best to stay away from such patterns where a clear indicator is not present.

RELATED TERMS
  1. Rectangle

    A pattern formed on a chart where the price of a security is ...
  2. Horizontal Channel

    Using trendlines to connect variable pivot highs and lows shows ...
  3. Accumulation Area

    A price range in which investors typically purchase shares of ...
  4. Trade Signal

    A sign, usually based on technical indicators, that it is a good ...
  5. Pattern

    In technical analysis, the distinctive formation created by the ...
  6. Measuring Principle

    In techincal analysis, An intangible principle for finding mininum ...
Related Articles
  1. Investing

    The Rectangle Formation

    Find out how this technical pattern can be useful in your trading arsenal.
  2. Trading

    Continuation Patterns: An Introduction

    Those random movements in the charts actually form patterns. Learn the basics of what these patterns are.
  3. Investing

    Sector Headwinds Buffeting First Solar (FSLR, TAN)

    First Solar has entered a new downtrend after failing to break out above two-year resistance.
  4. Investing

    Market Reversals And How To Spot Them

    The sushi-roll indicator may help lower the risk of trying to pick market tops and bottoms.
  5. Investing

    How To Interpret Technical Analysis Price Patterns: Triple Tops And Bottoms

    Triple and double tops and bottoms may be tough to spot, but once you learn them, they can be powerful patterns.
  6. Investing

    Introduction To Technical Analysis Price Patterns

    To "find your game" in technical analysis, you need to be able to recognize reversals and continuations as they form.
  7. Trading

    Can Netflix Get Back on Track? (NFLX)

    Netflix has entered a topping pattern after posting an all-time high while institutions continue to dump positions.
  8. Trading

    Advanced Candlestick Patterns

    Go beyond the basics! Learn to identify and trade island reversals, kicker patterns and more.
RELATED FAQS
  1. How effective is creating trade entries after spotting a rectangle pattern?

    Understand the basics of the rectangle chart pattern, and learn how effective it is as a basis for short- and long-term trading ... Read Answer >>
  2. How are rectangle patterns interpreted by analysts and traders?

    Understand the basics of the rectangle chart pattern, how it is created, and how traders and analysts interpret this pattern ... Read Answer >>
  3. How do I build a profitable strategy when spotting a rectangle pattern?

    Understand how to utilize the rectangle chart pattern to establish long- and short-term trading strategies, including optimal ... Read Answer >>
  4. How do I Implement a forex strategy when spotting a Rectangle Pattern?

    Understand what a rectangle chart pattern is, and learn a common strategy that traders use to obtain short-term profits when ... Read Answer >>
  5. What are the most common continuation candlestick patterns?

    Learn about the four most common types of continuation patterns found in candlestick charts: triangles, rectangles, flags ... Read Answer >>
  6. What are the main opportunities that arise when a stock exhibits a continuation pattern?

    Learn about continuation patterns and the opportunities they can present. Use these trading strategies to profit from these ... Read Answer >>
Hot Definitions
  1. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  2. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  3. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  4. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  5. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
  6. Yuppie

    Yuppie is a slang term denoting the market segment of young urban professionals. A yuppie is often characterized by youth, ...
Trading Center