3 Best Neutral Chart Patterns | Sideways/Neutral Trading Patterns | Trade Brains

In this video, we discussed the top 3 Neutral Chart Patterns that every trader should know. Here, we looked into the most common and frequently forming neutral or sideways chart patterns in the market.

3 Best Neutral Chart Patterns

1. Rectangle Chart Pattern:
Structure: A rectangle chart pattern forms when the price moves within a horizontal range between two parallel support and resistance levels. This pattern indicates that the market is in a period of consolidation, with buyers and sellers in equilibrium.
Types:
Bullish Rectangle: In an uptrend, a rectangle can act as a continuation pattern. After a period of consolidation, the price may break out above the resistance level, continuing the upward trend.
Bearish Rectangle: In a downtrend, a rectangle can also act as a continuation pattern. After consolidation, the price may break down below the support level, continuing the downward trend.
Signal: The breakout direction (upward or downward) from the rectangle determines the next price movement. Traders often wait for a clear breakout to confirm the continuation of the trend.

2. Broadening Triangle Chart Pattern (Expanding Triangle):
Structure: This pattern, also known as an expanding triangle, occurs when the price is making both higher highs and lower lows, forming two diverging trendlines. It creates a broadening formation that resembles a megaphone. This pattern often reflects increased volatility in the market.
Types:

Bullish Broadening Triangle: This is typically a continuation pattern during an uptrend. The pattern forms as price volatility increases, but eventually, the price breaks out upward, continuing the previous trend.

Bearish Broadening Triangle: This can also be a continuation pattern during a downtrend. The pattern forms with expanding price movements, and the price eventually breaks downwards, continuing the downtrend.
Signal: The direction of the breakout from the broadening triangle is crucial. It can suggest either a continuation or a reversal of the current trend. Traders usually look for a breakout confirmation before entering a trade.

Summary:

Rectangle Pattern: A horizontal consolidation range, indicating a pause before the trend resumes in the direction of the breakout.
Broadening Triangle Pattern: A pattern marked by increasing volatility with expanding price movements, signaling potential continuation or reversal depending on the breakout direction.
Both patterns represent periods of indecision in the market, and traders look for breakouts to determine the next move.

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