As with the symmetrical triangle, rectangles are neutral patterns that are dependent on the direction of the future breakout. Volume patterns can sometimes offer clues, but there is no confirmation until an actual break above resistance or break below support. A basic tenet of technical analysis is that broken support turns into potential resistance and visa versa. A return to or near the original breakout level can offer a second chance to participate. The estimated move is found by measuring the height of the rectangle and applying it to the breakout.
Rectangles represent a trading range that pits the bulls against the bears.
As the price nears support, buyers step in and push the price higher. As the price nears resistance, bears take over and force the price lower. Nimble traders sometimes play these bounces by buying near support and selling near resistance. Again, it is important to remember that rectangles have a neutral bias. Even though clues can sometimes be gleaned from volume patterns, the actual price action depicts a market in conflict.