Rectangles

AAA

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.

INVESTOPEDIA EXPLAINS '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. Cup and Handle

    A pattern on bar charts resembling a cup with a handle. The cup ...
  2. Confirmation On A Chart

    An indicator or chart pattern that provides evidence that the ...
  3. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  4. Head And Shoulders Pattern

    A technical analysis term used to describe a chart formation ...
  5. Pattern

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

    Fintech is a portmanteau of financial technology that describes ...
RELATED FAQS
  1. What is the difference between a drawdown in banking and a drawdown in trading?

    The term "drawdown" appears in both the banking world and in the arena of trading, but it has completely different meanings ... Read Full Answer >>
  2. How can the exponential moving average be used in swing trading?

    The exponential moving average (EMA) is a variation of the simple moving average that places more emphasis on the latest ... Read Full Answer >>
  3. Why is the Triple Exponential Moving Average (TEMA) important for traders and analysts?

    The triple exponential moving average (TEMA) is important for traders and analysts because it is useful as a trend indicator. ... Read Full Answer >>
  4. Why is the Vortex Indicator (VI) important for traders and analysts?

    Doug Siepman and Etienne Botes developed the vortex indicator to anticipate reversals in price trends. They believed that ... Read Full Answer >>
  5. What does a negative correlation coefficient mean?

    A negative correlation coefficient means that, for any two variables X and Y, an increase in X is associated with a decrease ... Read Full Answer >>
  6. Are exponential moving averages more effective than simple or weighted moving averages?

    An exponential moving average (EMA) uses an exponentially weighted multiplier to give more weight to recent prices, which ... Read Full Answer >>
Related Articles
  1. Active Trading Fundamentals

    Support And Resistance Basics

    Understanding the concept of Support and Resistance in trading can drastically improve your short-term investing strategy.
  2. Trading Strategies

    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.
  3. Trading Strategies

    Momentum Indicates Stock Price Strength

    Momentum can be used with other tools to be an effective buy/sell indicator.
  4. Trading Strategies

    Find Turning Points With Single-Day Patterns

    On their own, single-day patterns can be unreliable, but that doesn't mean they can't be used effectively.
  5. Forex Education

    The Rectangle Formation

    Find out how this technical pattern can be useful in your trading arsenal.
  6. Charts & Patterns

    Why These May Be the Top 4 Growth Stocks of 2015

    These four stocks have high upside potential in 2015.
  7. Chart Advisor

    Interested in Growth Stocks? See These 4 ETFs

    Given the rise in popularity of growth ETFs, there are several interesting growth stock choices for investors.
  8. Chart Advisor

    Watch Out For Falling Copper Prices

    Commodity traders have been turning their attention toward copper prices over the past several weeks.
  9. Chart Advisor

    Watch for Bullish MACD Crossovers in These Stocks

    These stocks are trending higher but recently experienced a pullback. Watch for a bullish MACD crossover to indicate upward momentum is continuing.
  10. Trading Strategies

    Bucking The Trend With Pattern Failure Strategies

    The best trade could be in the opposite direction when a classic price pattern doesn't behave according to ideal rules.

You May Also Like

Hot Definitions
  1. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  2. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  3. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  4. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  5. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  6. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
Trading Center