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How to Use Rectangle Chart Patterns to Trade Breakouts

Before heading towards the usage of rectangle chart patterns, first, it is essential to know whatrectangle is. Well, yes it is a shape, but in terms of Forex Trading, it is a pattern of the chart
which forms when the trading price gets bounded by parallel resistance and support levels. This
is a consolidation period between sellers and buyers when the market has not been taken over
by either of them. Before reaching the saturation, the price will move several times between
the resistance and support levels and then will enter a breakout. The two kinds of rectangle
chart patterns are Bearish Rectangle and Bullish Rectangle.

Bearish Rectangle gets formed when the price consolidated for some time when a downtrend is
going on. This scenario happens mostly when sellers take rest or a pause, before further
lowering their currency pairs. After falling below the support level, the couple tends to
formulate a rectangle shape. Talking about the Bullish Rectangle, it forms when there is an
uptrend is going on at the FX market. When the pair price consolidated for a while, before rising
further, they get shaped in a Bullish Rectangle, These rectangles are very important and holds a
significant place in the trading tools of a smart trader. The rectangle chart pattern signifies the
pause which stays for a while because the buyers and sellers take time for breathing before
getting enrolled further in uptrend and downtrend. This pauses forms rectangles, they are the
chart patterns which forms before the price pairs get forwards either up or down.

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