Forex Trend Continuation: The Rectangle Pattern

A rectangle continuation pattern resembles a rectangle (as its name implies) formed by two parallel to each other resistance and support lines. The bounded by the two trendlines range, or rectangle, represents a consolidation period in which there is a balance between the supply and demand of a currency. The currency price is moving within this bounded range and is likely to continue its original trend upon breakout. If this doesn't happen a transformation from a trend continuation to a trend reversal pattern will occur.

The height of the rectangle formation, measured from the breakout point, determines the target price.

A bullish rectangle pattern is observed when it is experienced during a bullish trend, where the breakout is on the upside. Accordingly, a bearish rectangle pattern is observed when the consolidation is experienced during a trend of a downward direction and the breakout continues the original trend.

To be successful at forex trading you need two main things - the knowledge and the right trading plaftorm. For a trading platform we can recommend you Easy Forex. It offers unique features such as Inside Viewer™, which will give you a unique insight of what other traders are doing, competitive spreads, 24/7 support, etc. Start trading from as little as $25.

Bookmark this page :