Rectangle range
Repeated acceptance between approximately horizontal boundaries.
What to look for
- Two or more tests of each boundary
- Width exceeds costs and minimum volatility
- No sustained close outside the range
Several completed swings stay between fixed horizontal edges. The late close above the top belongs to the breakout plan; the earlier touches simply define the range.
For a downside break, wait for a close below the range low. A fade plan instead uses rejection at an edge and fails beyond that edge.When the pattern is confirmed
Boundary rejection for mean reversion or a close outside for breakout; never mix the two hypotheses.
Where the idea is wrong
Beyond the boundary for a fade, or back inside for a breakout.
The easy mistake
Ranges eventually transition, and repeated fading can concentrate loss on the breakout.
A complete rectangle range example
Define approximately horizontal boundaries from repeated contacts and require enough width to cover assumed costs. Present boundary rejection and range breakout as two separate setups.
First rule to test
Boundary fade — enter after a candle rejects a frozen edge and closes back inside the rectangle.
Alternative rule
Breakout retest — require a close outside the rectangle, then enter only after the broken edge is revisited and holds.
Place it where the pattern is wrong
Place the example stop one fixed ATR fraction outside the relevant frozen boundary, whether testing the fade or breakout method.
Context, trigger and risk
The pattern handles timing. The other tools decide whether the location makes sense and how far normal price movement can reach.
Supplies a separately tested filter for quiet versus directional conditions.
Checks that range width exceeds costs and defines the stop buffer.
Adds an optional timing comparison near a price-defined boundary.
First exit to test
Range rotation — for fade examples, close at the midpoint or opposite boundary selected before entry.
Alternative exit
Range projection — for breakout examples, project one full rectangle height from the broken edge.
Patterns need a method around them
Open a related strategy to see the wider market filter, entry, stop, exit and no-trade rule.
Range mean reversion
Tests whether qualified boundary excursions revert toward a range midpoint.
- ENTRY
- Enter at the next H1 open after the first qualifying close back inside the frozen range.
- STOP
- Place the stop 0.20 × ATR(14) beyond the excursion extreme and size to 0.50% equity risk, rounded down to 0.01 lot.
- EXIT
- Exit at the frozen range midpoint. If neither stop nor midpoint trades, exit after eight completed H1 bars.
Donchian breakout
A rules-first breakout framework based on new lookback extremes.
- ENTRY
- Enter at the next H4 open after a completed close above the prior 20-bar upper channel for a long or below the lower channel for a short.
- STOP
- Initial stop is 2.0 × ATR(20) from the actual fill. Size to risk 0.50% of equity, rounded down to 0.01 lot; never add to or widen the position.
- EXIT
- Exit at the next H4 open after a completed close through the opposite 10-bar channel. The initial 2 ATR stop remains active until that exit.
Stochastic range rotation
Uses the oscillator to time a price-based range hypothesis rather than define the range.
- ENTRY
- Enter at the next H1 open after the combined price-close and stochastic re-entry signal.
- STOP
- Stop 0.20 × ATR beyond the frozen range boundary. Risk 0.50% equity and round down to 0.01 lot.
- EXIT
- Exit at the frozen midpoint or after eight completed H1 bars, whichever occurs first.
Try it on older charts
Separate early, mature and late range observations.