Rectangle Pattern
A consolidation bounded by roughly horizontal support and resistance, with price oscillating between them.
How it is identified
Test: two or more highs at approximately one level and two or more lows at approximately another, with no convergence
Unit
qualitative
In depth
The rectangle is the most objectively definable of the classical patterns because both boundaries are horizontal prices that can be stated exactly. Its practical value is that it defines a range within which mean-reversion rules apply and outside which they do not, giving a clean framework for both entry and invalidation. Repeated tests of a boundary consume the resting orders that created it, so a fourth or fifth touch is not evidence of increasing strength. Which side eventually gives way is not determined by the shape, and no view is offered here.
Worked example
Support at ₹480 and resistance at ₹512 define a ₹32 range, 6.5% wide. Buying near ₹483 with a stop at ₹475 risks ₹8 against ₹29 of range — the geometry that makes range trading arithmetically viable.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Rectangle Pattern” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.