Rectangle chart

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Today you will read about rectangles and channels.

Besides triangles, you could also get the formation called channels and rectangles. A rectangle is precisely what is seen as a channel that develops when your support line is running horizontal, and you have range trading, so your trend line is also running out. A horizontal channel is formed between parallel support and resistance lines. This pattern usually indicates a relatively tough trend up or down, with the price stay within the lines until a breakout. A breakout from a channel specifies either a reversal in the trend or a change in the slope of the current trend. So you can get a breakout going up. When you get that breakout, if this one is a reversal of the trend, you see prices moving in a downtrend. These tops and bottoms are the peaks and valleys of price movement, and the support and Resistance line or draw are gathered by fighting price points in common. When you have this breakout, it's most likely telling you there's a reversal happening channel is the same, except it is on two horizontal lines.

Now we have up and down channels similar to a channel. Then we have breakout rectangles of the pattern formed between horizontal support and resistance lines identical to a channel. Rectangles and channels are known as flags and pennants.  A flag would be defined as bullish depending on the slope of the initial trend and the slope of the breakout. Continuation channel down there's a lot of mouthfuls there. A pennant would be defined as a bullish. A continuation or fair continuation triangle is only called a pennant because they look the same as they form a pennant. 

Like you wave it a sports game, then we go into wedges. Wedges are similar to triangles in that these patterns are formed between converging support and resistance lines. However, where the support resistance lines in a triangle have one positive and one negative slope, the support you define a wedge would have both positive and negative. Wedges with positive slopes are called rising wedges, and ones with negative slopes are called following wedges. This is a lot to remember, but the fact is they're all, except for rectangles and slopes, rectangles and channels. All of them form triangles. Breakouts are breakouts, so they have slightly different variations, whether it's a wedge or ascending or descending. They have slightly different rules, you know about them, but visually they all kind of look the same and anytime. You see price congesting into one of these patterns. The most common wedges are breakouts in the opposite direction, bearish breakouts in a rising wedge and bullish breakouts in a falling wedge. We have the following wedge, so we're looking for a bullish breakout. Here we have a rising wedge, and we're looking for bearish when we get the breakout. If you notice, we have price moving in towards a downtrend. We form the wedge and have the wedge breakout, and then the price moves into an uptrend. Here we have an uptrend price breaks out to the bottom, and it begins the beginnings of a downtrend.

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