ABSTRACT
The Rectangles, Double and Triple Tops The Triangular Price Formations, which we examined in Chapter 8, can be either Reversal or Consolidation Patterns. In the case of the Right-Angle Triangles, we know as soon as they have attained recognizable form in which direction the trend will (or should) proceed. With the Symmetrical Triangles, we have no way of knowing whether they point up or down until prices nally break away from them, although the odds are, as we have seen, that the previous trend will be continued rather than reversed. In this respect and in many others, our next class of technical formations, the Rectangles, resemble the Symmetrical Triangles. There are, in fact, so many points of similarity between them that we can forego any long and detailed discussion. (For illustrations in this chapter, see Figures 9.1 through 9.18.)
A Rectangle consists of a series of sideways price uctuations, a “trading area,” as it is sometimes called, which can be bounded both top and bottom by horizontal lines. A glance at any one of the examples that illustrate these pages will show how it got its name. On rare occasions, you may discover a chart pattern whose upper and lower boundary lines are parallel but either slightly down-sloping or up-sloping. So long as their departure from the horizontal is trivial, they may be treated as Rectangles. You will also nd, on occasion, patterns whose boundaries, while nearly horizontal, tend somewhat to converge. These may be considered Rectangles or Symmetrical Triangles; it does not matter which, because the “prognosis” will be the same in either case.
