Rectangle" price pattern - continuation of the trend

Rectangle price model is a classic example of price consolidation in a narrow range before further market movement in the chosen direction. Rectangle figure prices", located in the area ConsolidationAs a rule, they have clear and pronounced horizontal levels of support and resistance (without updating the highs and lows).

In the stock markets, such a pricing model appears in those moments when traders and investors are waiting for the release of important news, the results of which they doubt. After the publication, confirming the expectations of speculators, they continue to move the price in the previously selected direction.

Working out of the figure of technical analysis "Rectangle"

After breaking through the resistance level of of the bullish price model "Rectangle" price passes the distance equal to the height of the rectangle. В Rectangle Bear Figure the situation is mirrored, i.e. when the support level is broken, the price passes the distance equal to the height of the figure.

On rare occasions, this pricing model signals about the change of the trend, i.e. after the price rally there is a consolidation in the form of a "Rectangle" with a breach in the opposite direction to the previous trend. From the economic point of view, such a situation happens when the expected to be published macroeconomic data turn out to be worse than the experts' assumptions.

An example of the price of the "Rectangle" model