Sunday, October 17, 2010


Rectangles should generally be traded as continuation patterns.  They are indecision areas that are usually resolved in the direction of the trend.  Research has shown that this is true far more often than not. Of course, the trendlines run parallel in a rectangle. Supply and demand seems evenly balanced at the moment.  Buyers and sellers also seem equally matched.  The same 'highs' are constantly tested as are the same 'lows'. The market vacillates between two clearly set parameters.  (While volume doesn't seem to suffer like it does in other patterns, there usually is a lessening of activity within the pattern.  But like the others, volume should noticeably increase on the breakout.)

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