GBP/JPY -26/9/2022-

• Rectangle pattern breakout explained
• Rectangle pattern can be either reversal or continuation of the prior move
• We got a reversal pattern in this case, possibly ending the up trend
• A rectangle is defined by a clear support and resistance levels, ideally touching the boundaries more than twice
• Rectangle is a trading range, meaning markets are indecisive until the breakout
• We often get fake breakouts, which means prices breakout of the rectangle but quickly get back in
• Targets for the breakout is usually the height of the rectangle projected from the breakout point
• In the case above, we got a breakout at around 159 and the height of the rectangle is around 9. The breakout was to the downside so we subtract 9 from 159, we get a target of 150 and surprisingly it got hit in 2 trading days only
• The only question remaining now is; is the breakout going to lead to a long term trend reversal or will prove to be a fake breakout and return back to the rectangle ?
• The answer to that should be clearer in the upcoming days