What is a bullish rectangle pattern?

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The bullish rectangle pattern is a very important pattern. 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.