Rectangles

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. Charts & Patterns

    Continuation Patterns: An Introduction

    Those random movements in the charts actually form patterns. Learn the basics of what these patterns are.
  2. Trading Strategies

    Technical Analysis: Chart Patterns

    By Cory Janssen, Chad Langager and Casey MurphyA chart pattern is a distinct formation on a stock chart that creates a trading signal, or a sign of future price movements. Chartists use these ...
  3. Forex Education

    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.
  4. Charts & Patterns

    Analyzing Chart Patterns: Double Top And Double Bottom

    By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com The double top and double bottom are another pair of well-known chart patterns whose names don't leave much to the imagination. ...
  5. 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.
  6. Charts & Patterns

    Analyzing Chart Patterns: Triple Tops And Bottoms

    By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com The triple top and triple bottom are reversal patterns that are formulated when a security attempts to move past a key level ...
  7. Chart Advisor

    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. Price Action Traders

    In simple terms, price action is a trading technique that allows a trader to read the market and make trading decisions based on the actual price movement on the chart, rather than relying on ...
  9. Charts & Patterns

    Analyzing Chart Patterns: Round Bottoms

    By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com A rounding bottom, also referred to as a saucer bottom, is a long-term reversal pattern that signals a shift from a downtrend ...
  10. Charts & Patterns

    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. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center