What is a bullish rectangle pattern?

The bullish rectangle pattern is one of the most common chart patterns that you will ever see. It is a trend continuation pattern which means it normally comes in an uptrend and signals that the uptrend will continue.

In this pattern the stock will cool down after a long uptrend and stay in a relatively small area. When the stock finally beaks out to the upside it is a buy signal and normally indicates the stock will head higher.

This stock consolidated between the points $52.5 and $45. Finally it broke up to $55, past the $52.5 level. That indicated the stock will head higher.

volume The volume should be present when the pattern breaks it’s resistance level.

target The target is found by subtracting the top of the pattern to the bottom of the pattern and adding that to the top. In this pattern the top is $52.5 and the bottom is $45 making the difference $7.5. $52.5 plus $7.5 gives us a $60 target.

This stock hit $60 and started to pull back. In this formation the pattern target was almost perfect.

trading the pattern A professional trader may decide to buy the stock at the breakout and put a stop below support.

Other Chart Patterns

There are a variety of chart patterns out there which you can use to invest into the stock market. Here are a few examples.

Base on Base - This is a situation where the stock makes multiple rectangle patterns on top of one another.

Bearish Wedge - This pattern occurs in a downtrend when the stock pulls back a little and then continues lower.

Head and Shoulders - This pattern can be a reversal pattern in a uptrend and in a downtrend.