M4 · Part 1 — Continuation patterns · Lesson 27/144
6 min 45 XP
A rectangle (or range) is price trapped between a flat support and a flat resistance, bouncing between the two. Neither side can win, so price goes sideways. It is the most common state a market is in — most of the time, markets are ranging, not trending.
There are two ways to trade a box. Inside the range, you can buy near support and sell near resistance (fade the edges), with a stop just beyond. Or you wait for the breakout: a close beyond one edge, then the retest, targeting the height of the box projected from the break. The box is neutral — it can break either way — so the break tells you the direction, and the height tells you the distance.
Beware the false break
Range edges are full of stops, so they attract fake-outs: a stab beyond that snaps back inside. As always, demand a body CLOSE beyond the edge, ideally with a retest, before trusting the break.