Rectangle Chart Pattern Strategy – Backtest and Illustrative Example

If all chart patterns are as simple as the rectangle pattern, every technical trader would be a chartist of some sort. One of the most popular chart patterns every trader should know, the pattern is easy to spot. But what is the rectangle chart pattern strategy?

The rectangle chart pattern is a continuation pattern that forms a trading range during a pause in the trend. Sometimes referred to as a trading range, consolidation zone, or congestion area, the strategy for trading this pattern is to buy at the support and sell at the resistance if the rectangle is high enough or to trade the breakout above the resistance or below the support.

In this post, we take a look at the rectangle chart pattern strategy. We end the article with a backtest of both rectangle bottoms and tops.