All language subtitles for 5. Rectangle Chart Patterns

Well, if you like triangles, you might really like rectangles and rectangles like triangles are a

trading range.

They're bounded by a support line on the bottom and a resistance line at the top.

However, instead of converging, it's more running, parallel forming the shape of a rectangle, as

you'll see.

And they will continue along that kind of path, which makes gives us a lot of good trading opportunities

inside the path until there's a break out of the rectangle.

Now, you might say to yourself, well, which way does it break?

Does it have a tendency to go a certain way, whether it's going to break through a support line or

resistance line?

The answer that because it's a continuation pattern.

Is this going to follow the direction of that previous trend?

See how continuation patterns will follow the original trend compared to, let's say, reversal patterns.

But rectangles are by nature a continuation pattern.

So we'll be watching those trends and that overall direction of prices either up or down.

And then we'll see how the triangle or the rectangle forms and then we'll see how we can maybe trade

around that.

So if you look towards the middle of the chart and think about those support line at the bottom and

a resistance line at the top, if you were to draw those two lines, you know, in form a rectangle

distributionally, look at this from the moment.

You know, what may it look like on your chart?

We're about where you'd be drawing it on there, you'll think connecting the highs in the highs together,

maybe at the top and lows the lows with horizontal lines.

So if you saw something looked like something like this.

Well, terrific.

You're right.

If not, that's OK, too.

Now, we're learning here this whole idea.

I just wanna give you a little mini idea as we're going here.

And you can see in this particular rectangle pattern that there's an uptrend that we're entering into

the rectangle is into.

So in this case, there's a continuation pattern.

So to be a different direction, which was this uptrend.

But then it gets kind of this narrow trading range of resistance and support lines.

It goes up and bounces out a resistance line which can't push the prices higher.

The buyers or the bulls can't push the prices higher.

So prices come back down.

But a new trend doesn't form.

It doesn't turn into a downtrend.

It basically stops at that support line and then turns around and starts going back up towards the resistance

line and so on and so on.

Trading in this range and how wide the distance between the resistance lines, the power line will vary

by the security.

And at that moment time, sometimes it can be very, very narrow.

Sometimes it can be much wider, of course.

So it's not so much the idea of how wide or narrow it is.

It's more of that.

It's actually formed this rectangular pattern.

And if we look at that, you can say, oh, well, there's opportunities where I might want to buy or

their software where I might want to sell within a rectangle pattern.

And that's true.

We want to make sure that the pattern has fully formed.

So, again, we're looking to buy in at number at the number two or three touch of it you could buy.

And let's say that you can see the first touch there.

I don't have an arrow there.

The second touch.

I don't have an arrow there, too, though.

A lot of people are buying the second touch at that support line.

A real good confirming way is the buy in that the third line, you could put it up by number one and

then wait for it to come back down.

You know, it's either going to break through that resistance line at the time, keep going.

But if it turns around, there's a really good chance it's going to bounce again off that support line.

So once it comes back down, if you if you're a little bit later, are seeing this later or want to

be more sure, you could buy it the number two position here so you can buy in the second, third or

fourth touch if you're looking to sell, what's the security?

One thing you can do is do a lot of trading and sort of win for the trend to go back in a certain direction.

You could just trade freely within the within the rectangle.

So every time it comes up to a resistance line, that's where I'm selling.

So I would be buying, let's say, at the support lines, let it have its run up, sell it to take my

profits, let it come back down.

Right now I'm out of the security.

Once it gets down back that support line Twingo holds, I'll buy it again and then repeat that until

it breaks through as far as breaking the pattern.

But until then, what a nice trading opportunity to trade frequently as far as buying and selling withinside

the rectangular pattern.

All right.

So let's see in our rectangle here, where do you think the price will go next?

Right.

I mean, we're now at the top.

We're at a resistance line.

It could either break through the resistance line and go, you know, basically go upwards, you know,

to where I labeled letter A or it could turn back around and go to let her be.

Now, we don't really know.

But if you were to guess, maybe you'd have an idea of a guess around that guessing.

Start something.

We do a technical analysis, by the way, but we're looking at a chart pattern for funding.

You can kind of think about which way it might go and how you can really help confirm that when you

reach, let's say, the top or the resistance line.

The support line is look at your other indicators to help confirm things around volume moving, average

relative strength index.

Things that you're learning in the course will also give an indication of like, oh, this is a buy

opportunity or a sell opportunity.

So use those other indicators to help confirm that you'll learn the course whether what might happen

here.

But let's say I told you it was the.

They're going to break either through resistance line or is going to turn around and go all the way

down and break through the support line, be just based on what you see here.

Which one do you think it is?

I'm not giving you any other indicators.

You just got to go with the pattern here.

I'm just telling you, it is going to it's going to do one or the other because on this director and

I'm having fun and hopefully.

Or two.

Right.

Which one do you think it is?

Now, a little hint here, rectangles are trend continuation patterns.

What was the trend coming into the rectangle?

So if you thought, OK, I'm in an upward trend, so I'm going to say, well, you would be correct,

because that is the uptrend was already established before the uptrend then went into this rectangular

up and down pattern and if it was going to break through, will be watching for it to more more likely

break through to break through on the letter, either break through that resistance line and continue

our uptrend so that you can see that with where you'll see buying at the support line if we're doing

frequent trading within the rectangle because I bought it that support line, once it approaches that

resistance line, if it turns back away from the resistance line, I could still get out and do it all

over again at some point or since I bought it a support line I could buy again or if I held it through

this whole period, by the way, too.

And I bought our way way back when on that upturn, I could then hold on to it and wait for it to break

through that resistance line and continue the uptrend going upwards is the idea.

Now, if it was a downtrend, it'd be the exact opposite.

Right.

So, you know, just think of the rectangle and just the line on the left.

They're flipped where we are downtrend and it would break through B break through the support level

and continue the downtrend and you adjust your training accordingly.

Now, sometimes rectangles will have that same parallel move between the upper and the lower, the support

or the resistance line in the support line.

And the key is they're not converging.

They're moving parallel together, but they don't necessarily look on their side like in a sideways

market.

Sometimes they can trade on an angle or on a slope, either kind of continuing that uptrend or continuing

that downtrend.

Even with inside that it's got some movement inside there.

And that would be what we call a channel.

It's really a rectangle.

And there's a channel prices that are happening, you know.

So but the idea is it's not converging like a triangle.

It's still this narrower trading range.

And then to treat it properly as a rectangle again, triangles or rectangles, continuation patterns,

trend is your friend.

The idea is you're going to watch for them to go through.

If they do break through, they're going to go in that same direction of the original trend.

Nothing's perfect.

Of course, that's very important.

But that's the idea of these char patterns that have been proven over time.

More likely than not, hopefully, as they ideal, continue that pattern.