Thread by @ishan_jindal10

Weekend Learning Thread : Rectangle or Range or Box Pattern

-The pattern is formed within a horizontal support line below and resistance line above.

-Minimum two touches on each side is required for the pattern to be valid.

-It can also be seen as a horizontal channel.

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-As shown in the above image, shortfall is seen majority of the times which helps to identify the breakout side.

-For instance, the prices touched the resistance but couldn't come down to support line. This implies the sellers are weak and buyers are pushing the price up.

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Best Pattern :

-More the price touches on the lines, better the breakout will be

-Volume decreasing throughout the pattern

-High Volume on breakout

-Pullbacks and throwbacks preferable

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How to calculate target :

1. Specific Target (Green)
2. Trailing Stop Loss (Red)

Below is 1hr chart of Cipla

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How to trade the pattern :

-This is the simplest pattern to trade

-Once the pattern is formed completely, trade can be taken after a decisive breakout

-Stop loss is taken as the middle point of the two lines

Below is Daily Chart of Cipla

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What can go wrong :

-False Breakout

Below is daily chart of Cipla

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Patterns will not be always correct. Respect your stop losses to protect your capital.

Happy trading!

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#WeekendLearnings #TechnicalAnalysis #StockMarket #Charts #Stocks #Research #Knowledge #NSE #BSE #Nifty50 #NiftyBank #Pattern #Bull #Bear #Trade #Investment #CIPLA