When is the Bearish Rectangle confirmed?

After a prior decline, a candle CLOSE below the floor of the range (the lower of the two bottoms).

When is the Bearish Rectangle invalid?

Price trades above the top of the range before the breakdown.

BearishContinuationBeginner

A decline pauses in a box. Buyers hold the floor, until they do not.

Verdict: SkipBitcoin 4H: 3 trades, won 100%, avg trade +4.6% vs random day −0.2% (too few trades to judge). Backtest

Downtrend

Bearish Rectangle: textbook shape, step by step

Price is falling. Then it finds a floor and bounces.

step 1/6

Direction	Short (sell)
Entry	After a prior decline, a candle CLOSE below the floor of the range (the lower of the two bottoms).
Cancelled if	Price trades above the top of the range before the breakdown.
Target	Box height, projected from the breakout

3 common mistakes

same rules every time · equal size · no fees · method

Market	Trades	Won	Avg trade	Random day
Bitcoin · 4H · 2017-2026 · too few trades to judge	3	100%	+4.58%	−0.16%
US large caps (50) · 1D · 2016-2026	15	53%	−1.05%	−0.72%

Verdict: SkipLost money on average on US large caps. Bitcoin had too few signals to judge.

pattern −16%random −11%

US large caps (50) 1D: pattern −16% vs random day −11% over 15 trades

Breakout Aug 17, 2023, exit Aug 17, 2023 (target)+5.35%

Floor of the boxTopDowntrend31,804 · Jul 13, 2023Same floor28,701 · Aug 7, 2023Same top30,244 · Aug 8, 2023Breakdown

Bitcoin 12H, real candles from Jul 13, 2023

Breakout Mar 5, 2024, exit Apr 12, 2024 (target)+6.89%

Floor of the boxTopDowntrend107.66 · Nov 16, 2023Same floor91.67 · Feb 2, 2024Same top97.99 · Feb 9, 2024Breakdown

Starbucks 1D, real candles from Nov 16, 2023

trapBreakout Sep 8, 2020, exit Sep 16, 2020 (stop)−9.59%

Floor of the boxTopDowntrend34.89 · Aug 11, 2020Same floor30.65 · Sep 1, 2020Same top33.14 · Sep 3, 2020Breakdown

GE 1D, real candles from Aug 11, 2020