A rectangle is a market moving sideways between clear support and resistance.
Two ways to play it
- Range trading: buy near support, sell near resistance, stop outside the range boundaries. Suitable when the range is wide and clean.
- Breakout: wait for a close through one of the sides, with a target equal to the height of the range.
Be careful
Ahead of a breakout, false breaks are common — price breaks through briefly and then returns. Waiting for the close and/or a retest reduces these traps.
Key points
- Decide first: are you range trading or waiting for a breakout? Do not switch halfway through.
- Trend-following strategies perform poorly inside a rectangle.
Save your learning progress
Sign up free to mark lessons as completed and unlock all member lessons.
Sign Up Free
Risk disclaimer: all content on this site is provided for educational purposes and is not financial advice, signals, an invitation to trade, or a promise of profit. Trading carries a high risk and may result in the loss of part or all of your capital. Check the legality of service providers in your jurisdiction.