Rectangle Pattern
A rectangle pattern is a technical analysis charting pattern that is used to identify potential breakouts or breakdowns in a stock’s price. It is a continuation pattern that is formed when a stock’s price moves between two parallel trendlines, creating a rectangle shape. The pattern is formed when the stock’s price moves between two horizontal support and resistance levels, creating a rectangle shape. The pattern is considered to be a continuation pattern because it suggests that the stock’s price will continue in the same direction after the pattern is completed.
History of the Term
The term “rectangle pattern” was first used by William O’Neil in his book “How to Make Money in Stocks”. O’Neil was a pioneer in the field of technical analysis and was one of the first to recognize the importance of chart patterns in predicting future stock prices. He identified the rectangle pattern as one of the most reliable chart patterns for predicting future price movements.
Comparison Table
| Pattern | Breakout Direction | Breakout Strength |
|---|---|---|
| Rectangle | Up or Down | Strong |
| Flag | Up or Down | Moderate |
| Head and Shoulders | Down | Strong |
Summary
The rectangle pattern is a technical analysis charting pattern that is used to identify potential breakouts or breakdowns in a stock’s price. It is a continuation pattern that is formed when a stock’s price moves between two parallel trendlines, creating a rectangle shape. The pattern is considered to be a continuation pattern because it suggests that the stock’s price will continue in the same direction after the pattern is completed. For more information on the rectangle pattern, investors can visit websites such as Investopedia, The Balance, and Investing.com.
See Also
- Flag Pattern
- Head and Shoulders Pattern
- Double Top Pattern
- Double Bottom Pattern
- Triangle Pattern
- Wedge Pattern
- Cup and Handle Pattern
- Pennant Pattern
- Symmetrical Triangle Pattern
- Ascending Triangle Pattern
