Bullish Rectangle
Every trader knows the advantage of the consolidation stage. If this consolidation occurs between two parallel horizontal trendlines, the traders get the most profitable opportunity. The bullish rectangle is the type of pattern that indicates the continuation of the uptrend.
If the horizontal lines contain at least two highs and two lows, it will confirm the bullish rectangle pattern. However, it is often seen as a period of uncertainty in the market and indicates the huge fight between the buyers and sellers. When the breakout occurs, the traders show increased enthusiasm because this pattern always follows the previous uptrend.
Bearish Rectangle
Similar to the bullish rectangle, this pattern also appears between the two horizontal lines. This pattern always formed during the strong consolidation between the buyers and the sellers.
When the price breaks below, the price encounters sharp declines, which is more painful for traders. Because it will continue the previous downward trend, you should pay more attention to price divergence.
In summary, during the consolidation, a constant uncertainty diverted the trader’s attention. So, these two patterns help them identify the future direction of the market.
The bearish rectangle is the opposite of the bullish rectangle. It is formed when the price consolidates between two parallel horizontal trendlines and may indicate a continuation of the downtrend. A bearish rectangle is confirmed when the price breaks below the lower trendline, which may lead to further price declines.
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