# Bullish Rectangle Chart Pattern

In this lesson, we shall discuss the following:

1.What is a rectangle pattern?

2.How to identify a bullish rectangle?

3.How to trade a bullish rectangle?

### What is a rectangle pattern?

During a strong uptrend period, the price pauses and gives rise to continuous rectangle patterns.

There is temporary bounce in price between two parallel levels before the trend continues.

There are two types of rectangle patterns. Bullish and bearish. In this lesson, we will discuss the bullish rectangle.

Buying opportunity: The bullish rectangle pattern can be used for possible buying opportunities.

### How do we identify the bullish rectangle?

Compared to many pennants, the Bullish rectangles are easier to identify.

The chart below is an illustration of a bullish rectangle.

Number 1: resistance line

Number 2: Support line

From the above chart, we can see the following:

In a strong uptrend , the price rises and then begins to stabilize between temporary support and resistance levels.

The name Bullish rectangle is derived when the price moves sideways , bouncing between these two parallel lines forming a box-like shape.

Break out of the price above the upper resistance level occurs and its uptrend continues.

Practice session:

Exercise 1: Identify the bullish rectangle. Show exercise

Exercise 2: Identify the bullish rectangle. Show exercise

### How to trade the bullish rectangle?

There are two techniques that can be adopted to trade the bullish rectangle.

### Technique 1

Enter the trade: When a candlestick closes above the rectangles upper parallel line (the resistance level). Enter with a long (buy) order.

Place your stop loss below the rectangles lower parallel line (the support level).

The height of the rectangle is measured.

The profit target is placed the same distance above the top of its upper parallel line.

### The chart below is an illustration.

Number 1: Resistance line

Number 2: support line

Number 3: Area where price has broken through resistance number 1

2 Stop loss

3 Take profit

Practice session

### Technique 1

Exercise 1: Place your entry, stop loss and take profit. Show exercise

### Technique 2

The same as technique 1, we wait for a candlestick to close above the upper parallel line, breaking the rectangles resistance.

Wait for the price to retest the upper line.

The broken resistance level now becomes support.

Place your stop loss below the rectangles upper parallel line (the old resistance level that has now turned into a support)

The same as technique 1, we measure the height of the rectangle and then place the profit target the same distance above the top of its upper parallel line.

### The chart below is an illustration.

Number 1: Resistance turned support

Number 2: Support

1 Stop loss

1 Take profit

### Practice session

Exercise 1: Place your entry, stop loss and profit target. Show exercise

### Nut Shell

An overview of the lesson discussed so far…

During a strong uptrend period, the price pauses and gives rise to continuous rectangle patterns.

Bullish rectangles offer a buying opportunity.

Enter: Technique 1: Enter the long trade after the rectangles upper resistance level has been broken.

Technique 2: Enter after the resistance has been broken and then retested.

### Place the stop loss:

Technique 1: Place the stop loss below the rectangle’s lower support line.

Technique 2: Place under the higher parallel line once it has turned into a support.

Profit Target: Place the profit target the same distance above the rectangles upper resistance level as the distance between the rectangles two parallel lines.