Technische analyse: trend, bullish & bearish rectangle - Cryptocursus-info.nl (2024)

FAQs

What is bullish rectangle and bearish rectangle? ›

Bullish Rectangle vs Bearish Rectangle

While the bull alternative occurs in an upward trend, and then gets confirmed with an eventual upside or resistance breakout, the bearish setup appears in a downtrend and may be confirmed by a downside breakout.

A rectangle occurs when the price is moving between horizontal support and resistance levels. The pattern indicates there is no trend, as the price moves up and down between support and resistance. The rectangle ends when there is a breakout, and the price moves out of the rectangle.

How to trade using the rectangle chart pattern. To trade rectangle patterns, you can employ one of two strategies: Identify the levels of support and resistance, then buy at support and sell at resistance. Wait for the price to break out either in an upward or downward trend and enter the trade in that direction.

A rectangle chart pattern has an 85% success rate on an upside breakout, achieving an average 51% profit in a bull market. If the price breaks downwards, the move is 76% successful, with an average price decrease of -16%.

Although some investors can be “bearish,” the majority of investors are typically “bullish.” The stock market, as a whole, has tended to post positive returns over long time horizons. A bear market can be more dangerous to invest in, as many equities lose value and prices become volatile.

Instead of manually selecting Rectangle in the shapes list, you can just use the keyboard shortcut Alt+Shift+R (Windows) or ⌥⇧R (Mac). Rectangle will be selected in the toolbar automatically, ready to be placed on the chart.

Are Descending Channels Bullish or Bearish? A descending channel is a bearish sign, indicating lower high prices and lower low prices for a security.

In Euclidean plane geometry, a rectangle is a quadrilateral with four right angles. It can also be defined as: an equiangular quadrilateral, since equiangular means that all of its angles are equal (360°/4 = 90°); or a parallelogram containing a right angle.

The Rectangle tool allows you to draw rectangular shapes (vector and pixel-based) and paths (shape outlines). Select the Rectangle tool (U) . Use the Options bar to customize tool settings, like Fill, Stroke, Width, and Height, to get the effect you want. Draw shapes or paths on the canvas.

Steps to employ the breakout trading strategy

Determine price range levels: Using the breakout indicator, identify different price range levels, which are usually indicated by swing highs or lows in the form of a "V". For breakout trades, these levels are essential points of entry and exit.

What is the best indicator for a breakout trade? ›

Indicators such as Moving Averages, RSI and MACD can be used to measure the strength of the breakout. Volume: An important factor to identify a breakout is the trading volumes of the stock. It is essential that the volumes traded should be high on the day of the breakout.

Breakout stocks often have a sudden surge in trading volume, which may indicate growing investor interest. Additionally, keep an eye out for stocks that are breaking through key resistance levels or forming bullish chart patterns, such as the cup-and-handle, ascending triangles or flag patterns.

The flag is typically a rectangular or parallelogram shape, and it slopes against the direction of the previous trend. If the preceding trend was bearish (downward), the flag will usually slope upward. The flag's width is generally narrower than the flagpole's length.

During a bullish market, when the MACD line crosses above the signal line, it is a bullish signal, indicating that the uptrend is gaining momentum. This can be an entry point for long positions. On the other hand, when the MACD line crosses below the signal line, it is a bearish signal.

Rectangles are continuation patterns that occur when a price pauses during a strong trend and temporarily bounces between two parallel levels before the trend continues. As with many chart patterns, there is a bullish and bearish version.

A bullish order block is where the last bearish candle in a downtrend occurred before a sharp rise. Conversely, in a bearish order block, traders identify the last bullish candle before a significant fall. Note that order block candles visible on a higher timeframe tend to be more probable.