Bullish Rectangle Chart Pattern

During a strong uptrend period, the price pauses and gives rise to continuous rectangle patterns.

There is a temporary bounce in price between two similar levels before the trend continues.

There are two types of rectangle patterns. Bullish and bearish. In this lesson, we will discuss bullish rectangles.

Buying opportunity: The bullish rectangle pattern can be used for possible buying opportunities.

How Do We Identify The Bullish Rectangle?

Compared to many pennants, the Bullish rectangles are easier to identify.

The chart below is an illustration of a bullish rectangle.

Number 1: resistance line

Number 2: Support line

In a strong uptrend, the price rises and then stabilizes between temporary support and resistance levels.

The bullish rectangle is derived when the price moves sideways, bouncing between these two parallel lines forming a box-like shape.

Break out of the price above the upper resistance level occurs, and its uptrend continues.

Practice session:

Exercise 1: Identify the bullish rectangle. Show exercise

 Exercise 2: Identify the bullish rectangle. Show exercise

 How To Trade The Bullish Rectangle?

Two techniques can be adapted to trade the bullish rectangle.

Technique 1

Enter the trade: When a candlestick closes above the rectangle's upper parallel line (the resistance level). Enter with a long (buy) order.

Place your stop loss below the rectangles lower parallel line (the support level).

The height of the rectangle is measured.

The profit target is placed the same distance above the top of its upper parallel line.

The Chart Below Is An Illustration.

Number 1: Resistance line

Number 2: support line

Number 3: Area where price has broken through resistance number 1

1 Buy order (long entry)

2 Stop loss

3 Take profit

Practice session

Technique 1

Exercise 1: Place your entry, stop loss and take profit. Show exercise

Trading the Bullish rectangle

 Technique 2

Enter your trade

As with technique 1, we wait for a candlestick to close above the upper parallel line, breaking the rectangle's resistance.

Wait for the price to retest the upper line.

The broken resistance level now becomes support.

Place your stop loss below the rectangle upper parallel line (the old resistance level that has now turned into support)

Like technique 1, we measure the rectangle's height and then place the profit target the same distance above the top of its upper parallel line.

The Chart Below Is An Illustration.

Number 1: Resistance turned support

Number 2: Support

1. Buy order (long entry)

2. Stop loss

3. Take profit

Practice Session

Exercise 1: Place your entry, stop loss, and profit target. Show exercise

Nut Shell

An overview of the lesson discussed so far

During a strong uptrend period, the price pauses and gives rise to continuous rectangle patterns.

Bullish rectangles offer a buying opportunity.

Enter: Technique 1: Enter the long trade after the rectangle's upper resistance level has been broken.

Technique 2: Enter after the resistance has been broken and then retested

Place The Stop Loss:

Technique 1: Place the stop loss below the rectangle’s lower support line.

Technique 2: Place under the higher parallel line once it has turned into support.

Profit Target: Place the profit target the same distance above the rectangle's upper resistance level as the distance between the rectangle's two parallel lines.