What is Rectangular Formation?
Rectangular graph formation occurs when prices are touched by both levels for a period of time between support and resistance levels.
These levels of support and resistance can be horizontal, as well as down or up-view channels. What is important here is not that the support and resistance levels are in the form of horizontal or up / down channels; Are parallel to each other.
The formation of the rectangle starts with the price movements rising from the support level, then comes back to the support level again after reaching the level of resistance and then completes by making a movement towards the resistance level again.
Conversely, it is also possible to create a graphic which starts with a withdrawal from the resistance level. Rectangular graphic formation
occurs when the prices are at least twice the level of support and
twice the level of resistance, in other words the formation of at least
four movements. It is not possible to talk about the formation of a
rectangle if the prices move to any side breaking the level of support
or resistance before the completion of the four movements.
The entry point to the position is determined according to which side of the price will break after the completion of the fourth movement. The target price level is the distance between the support-resistance levels that form the rectangle, up or down, from the fracture level.