Rectangle chart pattern, Should you prefer?
Rectangle chart pattern is a significant technical indicator. Its significant feature is that it mainly linked with the support and resistance points. It reflects the movement of the currencies in form of horizontal lines. This chart pattern links the support points with buyers and the resistance point with sellers. It is a classical concept that you should buy a currency at a prominent support point while you should sell it at some significant resistance point. There are two conditions associated with rectangle chart that the value of a currency normally remains in the pattern for a long duration or the chart pattern can be sometimes very insignificant.
Strengths of a Rectangle chart pattern:
It is very easy to recognize this pattern. Similarly it is not that much difficult to confirm it as you can easily do it when you observe two high points and two low points. Such high and low points create two parallel lines. These lines exist both over and below the area of price movement which is usually called price action. Both of these lines are the support and resistance points for sound Forex trading. another major strength of this pattern is that you can easily find it in all time-frames.
Like every other thing, the Rectangle chart pattern also has a weakness as well. It does not reflect the trend of the market in terms of bullish or bearish. Therefore if you want to apply and use this pattern then you should prefer to trade with the trend. Then this pattern can serve you in best possible manner.
Although it has a weakness yet there is a safest move to trade with this pattern. The safest zone of trading is to trade when the price movement of a currency reaches near the upper part of the Rectangle.