Understanding the Bullish Rectangle Pattern

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The Bullish Rectangle Pattern is quite a powerful continuation signal in technical analysis. It shows up during uptrends. After some sideways movement, prices usually keep climbing.

Pattern Characteristics

  1. Previous Trend: Appears after a clear uptrend

  2. Two Parallel Horizontal Lines:

    • Upper Boundary: Links a couple high points. Resistance.
    • Lower Boundary: Links low points. Support.
  3. Volume Profile:

    • Drops during consolidation
    • Jumps up at breakout

How It Forms

Price climbs, then pauses. Bulls and bears reach a kind of standoff. The price bounces between boundaries. Then boom! It pushes through the top with heavy volume.

Trading It

  1. Entry Point: Jump in when price breaks the upper line with volume
  2. Price Target: Add rectangle height to breakout point
  3. Stop Loss: Just below the bottom line

Market Stuff

It seems the 2025 research is pretty impressive - these patterns work about 85% of the time in bull markets. Not bad! Traders see around 51% profit when they spot these correctly. Works in stocks, forex, crypto... pretty much everywhere.

Things to Watch

Check if breakouts stick through closing prices. Volume matters.

Watch out for fake breakouts. They're tricky.

Maybe use RSI or MACD too? Just a thought.

The pattern is basically a breather. Bulls getting ready for another push. Kind of surprising how reliable it can be for technical traders.

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