Trading Tips Crypto using Rectangle Pattern

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Bittime - Professional traders recognize the opportunity for range trading when encountering a classic pattern. Analyzing bearish and bullish rectangles aids in identifying trend changes, guiding traders on when to engage in range trading for stocks and cryptocurrencies.

Get to Know with Rectangle Pattern

A bull trend occurs when demand surpasses supply, while a bear trend emerges when sellers outweigh buyers. However, when both bulls and bears hold their positions firmly, a trading range forms. This often leads to the creation of a rectangle pattern, also known as consolidation or congestion zones. Although bearish and bullish rectangles are generally viewed as continuation patterns, they sometimes act as reversal patterns, signaling significant tops or bottoms.

How to Recognize Rectangle Pattern

Before delving into the specifics of bullish and bearish rectangle patterns, it's essential to understand how to recognize them. 

A rectangle pattern forms when an asset establishes at least two comparable tops and bottoms at nearly the same level. Drawing two parallel lines connecting the high and low points delineates the resistance and support lines of the rectangle.

Duration of the Pattern

The duration of a rectangle can vary from a few weeks to several months. If the consolidation period is shorter than three weeks, it's considered a flag. Typically, the longer an asset consolidates, the more significant the eventual breakout or breakdown.

Bullish Rectangle Pattern

For instance, in an uptrend, bulls initially push the price higher, creating the first reaction high. After a correction, dip buyers enter the market, forming the first trough.

As demand persists, the asset attempts to resume its upward movement. However, when the price approaches the previous reaction high, profit-taking occurs, forming the resistance of the rectangle. Conversely, buyers defend the previous reaction low, forming the support.

Predicting the breakout direction is challenging, and prices may trade within the support and resistance for weeks or months. Therefore, traders often wait for the price to escape the rectangle before taking a bullish or bearish stance.

In a bullish scenario, the price breaks above the resistance, signaling a potential uptrend continuation.

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Bearish Rectangle Pattern

Conversely, in a downtrend, when prices reach perceived undervalued levels, dip buyers absorb selling pressure, leading to a reaction low. Attempts by bulls to reverse the trend are met with resistance, resulting in a reaction high.

Subsequent attempts by traders to buy the dip are thwarted by bears near the previous reaction high, forming a rectangle pattern.

The bearish rectangle completes when prices break and close below the support, signaling a potential downtrend resumption.

A Bullish Continuation Rectangle Pattern

To estimate the breakout's target, calculate the rectangle's height and add it to the breakout level. However, prices often overshoot the target significantly.

Similar processes apply to Bearish rectangles

In conclusion

Rectangle patterns serve as valuable tools for traders, offering insights into both continuation and reversal trends. To benefit, traders should wait for sustained breaks above or below the pattern before initiating positions. 

Additionally, while target objectives provide guidance, traders must consider broader market conditions and price action for informed decision-making.

How To Buy Crypto From Bittime

You can buy and sell crypto assets in an easy and safe way via Bittime . Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti. 

To be able to buy crypto assets on Bittime, make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application. 

Learn How to Buy Crypto on Bittime.

Monitor price chart movements of Bitcoin (BTC), Ethereum (ETH), Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.

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DISCLAIMER: This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.