Rectangles and confirming the break

The rectangle is consolidation at its plainest: price shuttles between a flat support and a flat resistance. You know this shape from level 2 — it is a small sideways band built in the middle of a trend. When it appears in a trend context, the traditional reading is that the band leans toward resolving in the trend's direction.

Whatever the pattern, judging its breakout comes back to the same three questions. Did price CLOSE beyond the boundary, or did only a wick poke through? Did breakout volume clearly expand compared with the quiet of the compression? And when price returns to test the broken boundary, does that boundary play its new role — the role reversal you met in level 3?

This trio — close, volume, retest — is your pattern referee. Patterns tell stories; the referee says whether the story is actually playing out this time. Seeing the shape is the easy part; the discipline is refusing to declare an outcome before the evidence arrives, however handsome the shape may be.