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Rectangle: A Price Contraction Formation
It is the price action within the pattern that is giving information. FOCUS!
Dr. Schaap says,"Great traders do not know everything, they know what makes money."
When looking at a chart, a great trader obeys price. Don’t jump to any conclusions about what you think price will do, better to wait.
When price is not trending up or down, it is in a contraction phase or 'range'. Dr. Schaap covers this in Chapter 3 of ADXcellence and also in detail on the Trend Master CD.
Pattern reading will help with correct expectations for money management, but we wait for the signal from price before taking action. A higher low above the formation is a technical buy signal or a lower low below the formation is a technical sell signal.
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