đ§A Bearish Rectangle is a continuation pattern in day trading, often signaling that the price of a cryptocurrency is likely to continue its downward trend.
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It forms when the price moves between two parallel horizontal support and resistance levels, creating a rectangular shape on the chart. During this time, the price consolidates, as buyers and sellers temporarily reach an equilibrium. Traders typically see this consolidation as a pause before the price breaks below the support line, continuing its bearish trend.
In crypto day trading, traders may enter short positions once the price breaks below the support level of the rectangle, confirming the bearish continuation. To increase the odds of success, traders often use volume analysis to confirm the breakout, as a higher volume on the breakout can indicate stronger momentum. Additionally, traders may set their stop loss above the resistance level and take profit at a distance equal to the height of the rectangle from the breakout point to manage risk effectively.
