Home Forums General General Talk Guidelines to trade by using Rectangles

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      Guidelines to trade by using Rectangles
      In a rectangle, price moves horizontally between overhead
      resistance and underlying support
      best forex signals and Breakout
      A breakout occurs when price closes outside the boundary of a chart pattern.

      Touches There should be at least two touches of each trend line.

      Trend lengths
      A short-term trend lasts up to three months. An intermediate term
      or secondary trend lasts between three and six months. A long-term trend or primary trend lasts longer than six months

      Tops have price trending into a chart pattern from the bottom,
      and bottoms have price trending into a chart pattern from the top

      The price velocity leading to and exiting from a chart pattern are often similar even if the direction is reversed.

      Undershoot or overshoot
      Both undershoot and overshoot occur before a chart pattern begins. Undershoot happens when price briefly dips below
      the entrance of a chart pattern. Overshoot happens when price briefly soars above it.

      A rectangle forms because
      traders want to own the stock at two fixed prices, one low and one
      high, setting limits (for a time) on how far price moves.

      Prices trend up to the formation and then
      oscillate between two horizontal trend lines
      before breaking out upward.

      Measure rule and take profit for best forex signals
      Measure the height of the rectangle from trend line to trend line.
      For upward breakouts, add the height to the top trend line; for
      downward breakouts, subtract it from the bottom trend line. The
      result is the minimum expected move. For a maximum price
      target, measure the length of the rectangle and extend it vertically
      above the top trend line (for upward breakouts) or below the
      bottom one (downward breakouts). The price becomes the
      maximum expected move.

      Wait before place forex trading signals for breakout Since you cannot be sure in which direction a rectangle will break
      out, wait for prices to close outside the trend line before fx trading
      in the direction of the breakout.

      Tall rectangle scalp If the rectangle is tall enough, sell or sell short near the top trend
      line and buy or cover near the bottom one.

      Watch for rectangles forming as the corrective phase of a
      measured move up formation and adjust the target price
      accordingly. Rectangle reversals sometimes appear as flat top

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