Price oscillates between a flat ceiling and a flat floor. It can be faded at the edges or traded on the eventual breakout.
How to identify it
- At least two touches of both the top and bottom
- Boundaries roughly horizontal
- Moves inside the range lack follow-through
Entry
Fade the edges with rejection, or trade the close outside the range.
Stop loss
Just beyond the edge being faded, or back inside the range on a breakout.
Target
Opposite edge when fading; range height when breaking out.
Invalidation
Acceptance outside the range against your position.
Does it work for you?
Textbook reliability means little until you know your own numbers. Tag your rectangle / range trades in TradeZento and it shows your win rate, average win and loss, and P&L per trade for this pattern, so you know whether to keep it in your playbook.