"If you already know that the terrible anxiety of financial loss would be more than you can mentally and emotionally tolerate, this concern must be weighed heavily in the risks you take.
- Steven Hendlin, Ph.D., author: The Disciplined Online Investor"
Rectangle patterns are continuation patterns showing indecision in trader’s sentiment about bullish and bearish conditions. Rectangle patterns are reliable patterns since the direction of
the breakout/breakdown is known during the rectangle formation. These patterns are
continuous and follow in the same prior direction (Up or Down) after the pattern formation.
Rectangle formations are bound by two horizontal trend lines, where prices oscillate
between the highs and lows. The prices must intersect these trend lines at least twice
before a breakout or breakdown can result. The volume within the pattern is usually quiet and
increases during the breakout/breakdown stages.
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HEREIN SHOULD NOT BE CONSTRUED AS CONSERVATIVE STRATEGIES BUT
RATHER SPECULATIVE AND FOR SHORT-TERM TRADING PURPOSES ONLY.
THERE IS EQUAL OR GREATER POTENTIAL FOR LOSS WHILE USING THIS STRATEGY AND TRADE SETUPS.
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