Rectangle

By Laurent · Apr 2026

A continuation or reversal pattern where price bounces between horizontal support and resistance lines, forming a box shape. The breakout direction determines the signal.

What Is a Rectangle Pattern?

A rectangle (also called a trading Range or box pattern) forms when price moves sideways between two horizontal levels: a flat Resistance line at the top and a flat Support line at the bottom. The price bounces back and forth between these lines, creating a box-like shape on the chart.

Trading the Rectangle

There are two approaches. First, trade within the rectangle: buy at support and sell at resistance. On USD/JPY, a bounce off the lower boundary with a bullish Pin Bar gives a long entry targeting the upper boundary.

Second, trade the Breakout. When price closes decisively above the resistance or below the support, it signals the end of the rectangle and the beginning of a new directional move. The target is the height of the rectangle projected from the breakout point.

Key fact: Rectangles that form during an uptrend break upward more often (continuation). Rectangles during a downtrend break downward more often. But never assume the direction; let the breakout confirm.

Avoiding False Breaks

Rectangles are notorious for Fakeout breakouts, where price briefly pokes through a boundary and then reverses back into the range. To filter these, wait for a full candle close outside the rectangle on the daily chart, or require the breakout candle to close beyond the boundary by a meaningful amount (such as half the range's height).