Rectangle Pattern
A rectangle is a chart pattern where price bounces between two parallel horizontal levels — at least two similar highs and two similar lows — during a pause in the trend. It is complete only on a breakout, and the target is the rectangle's height added to the breakout.
Markets often take a breather after a strong move, trading sideways between a clear ceiling and floor. Draw a box around that range and you have a rectangle. It is one of the simplest chart patterns, and its breakout often launches the next leg. This entry explains how to draw rectangles, trade the breakout and estimate targets.
- Category
- Price Action
- Reading time
- 3 min
- Also called
- Rectangle, Trading range pattern, Congestion area
- Updated
The rectangle in plain words
A rectangle forms during a pause in the trend, with two comparable highs and two comparable lows joined by parallel lines.1
It is also called a trading range, consolidation zone or congestion area, and it is incomplete until price breaks out.1
Rectangles can act as either continuation or reversal patterns, depending on the price action around them.2
How to trade a rectangle, step by step
Find the range
At least two similar highs and two similar lows. See Range.
Draw the lines
Resistance across the highs, support across the lows. See Support and Resistance.
Wait for a breakout
Direction is usually unknown in advance.
Check volume
Expansion on the breakout adds confirmation. See Volume.
Set the target
Rectangle height added to the breakout level.
Place a stop
Back inside the range. See Stop Loss.
Worked examples
Example 1 — Upside breakout target
Target $60Price trades between $40 and $50, then breaks above $50.
| Height | $50 − $40 = $10 |
| Target | $50 + $10 = $60 |
The estimated move is the rectangle's height applied to the breakout.1
Example 2 — Downside breakout
Target $30Same range, but price closes below $40.
| Height | $10 |
| Target | $40 − $10 = $30 |
The same measurement works downward, which is why the breakout direction matters more than the guess before it.1
Example 3 — Trade plan
2.25 : 1Buy the breakout at $51, stop at $47, target $60.
| Risk | $51 − $47 = $4 |
| Reward | $60 − $51 = $9 |
| Reward-to-risk | 2.25 : 1 |
A stop back inside the range limits the damage if the breakout fails. See Breakout.
Rectangle vs symmetrical triangle
| Aspect | Rectangle | Symmetrical triangle |
|---|---|---|
| Boundaries | Parallel, horizontal | Converging |
| Volume pattern | No standard pattern | Usually contracts |
| Complete when | Breakout | Breakout |
| Target | Height of the range | Widest part. See Triangle Pattern |
How traders use rectangles
Breakout trading
Entering when price leaves the box. See Breakout Trading.
Range trading
Buying support and selling resistance inside. See Range Trading.
Trend continuation
Adding to positions after a pause.
Targets
Measured moves from the height.
Advantages and disadvantages
Advantages
- Easy to draw.
- Clear entry, stop and target levels.
- Works on any time frame.
Disadvantages
- Breakout direction is uncertain.
- False breakouts are common.
- Long ranges can tie up capital.
Going deeper
Read as far as you need. Each level builds on the one before it.
Close, not exact
Beginner
The highs and lows don't need to be identical, only reasonably close.1
Volume behaviour
Intermediate
Rectangles show no standard volume pattern; volume may fade or be choppy, so look for expansion on the breakout.1
Duration and targets
Advanced
A short rectangle may just reach its target, while a long one can exceed it, especially with strong volume and new highs.1
Common mistakes
Guessing the direction
Wait for the breakout.
Stops too tight
Retests of the broken level are common.
Ignoring volume
Weak-volume breakouts fail more often.
Forcing a box
Two touches on each side are the minimum.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- A rectangle is a range between parallel horizontal lines.
- It needs at least two highs and two lows.
- It can be a continuation or reversal pattern.
- Target = height added to the breakout.
- Wait for the breakout and confirm with volume.
Frequently asked questions
Is a rectangle bullish or bearish?
How long can a rectangle last?
What is a bullish rectangle?
Further learning
- Range Trading
Trading inside the box.
- Breakout Trading
Trading out of the box.
- Triangle Pattern
A converging cousin.
- Flag and Pennant
Shorter continuation patterns.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- StockCharts ChartSchool. Rectangle (opens in a new tab) Checked .
- StockCharts ChartSchool. Introduction to Chart Patterns (opens in a new tab) Checked .
Read more elsewhere
- Trading Metrics (our sister site): Rectangle (opens in a new tab)
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. Trading Metrics is our sister site, under the same ownership; we are not affiliated with any other publisher linked above. Last reviewed . Report an error or request a source credit.