WEBVTT 00:02.600 --> 00:11.150 In this video, we're talking about rectangle tops and bottoms, so a rectangle, top or bottom is a 00:11.150 --> 00:14.870 pattern that, as I'm sure you can guess, is shaped like a rectangle. 00:15.380 --> 00:22.190 And what happens is that support and resistance comes into play at the same two levels and then you 00:22.190 --> 00:23.720 eventually get a break out of it. 00:23.720 --> 00:30.860 And the idea is that in the case of a rectangle top, you're rallying into it and then you break down. 00:30.890 --> 00:31.870 It's a reversal. 00:32.600 --> 00:35.390 It becomes a rectangle shape top to the market. 00:36.200 --> 00:42.470 If you are falling and you get a rectangle consolidation area and you break out of it to the side, 00:42.470 --> 00:45.230 it is a rectangle bottom, pretty straightforward. 00:45.230 --> 00:47.990 And they happen on all time frames. 00:48.680 --> 00:50.020 So you see them quite a bit. 00:50.030 --> 00:54.960 It's just simply consolidation that doesn't lead to continuation, rather a reversal. 00:55.520 --> 01:01.010 So let's go ahead and draw a rectangle here and the Litecoin market. 01:02.180 --> 01:12.680 Now, how you will trade this is one of two ways, most of the time you will either take a measurement 01:13.130 --> 01:19.640 and most people do it this way, you'll take a measurement and you'll aim for the exact same height. 01:19.670 --> 01:24.470 So from eighty dollars to seventy six dollars is where you're looking at here. 01:24.810 --> 01:27.050 Well, 80 minus 76 is four dollars. 01:27.080 --> 01:33.000 So once you break out of 76, you're looking for a move down to 72, something that you clearly hit. 01:33.650 --> 01:37.970 However, some traders, you know, with their stop loss are behind here. 01:40.050 --> 01:45.020 Adjust this now, this is the way you're typically taught, but a lot of traders will, if they have 01:45.020 --> 01:48.940 to risk this for this, well, that's a one to one trade. 01:48.950 --> 01:49.700 They don't want that. 01:49.700 --> 01:50.510 They want more. 01:50.960 --> 01:52.750 So they aim for double. 01:53.150 --> 01:59.510 And in this case, clearly you've gotten it because remember, you want to risk one to gain to minimum, 01:59.810 --> 02:01.790 preferably three or four, but. 02:03.230 --> 02:08.600 As this breaks down, they will move their stop loss to break even once you get that one to one and 02:08.600 --> 02:11.960 then they'll let it run or they'll just let it run like that. 02:12.350 --> 02:20.330 An alternative is to set a stop loss at half the height and then aim for the four dollars here, the 02:20.330 --> 02:23.000 height of this trade. 02:23.000 --> 02:27.770 And that gets you back to one wrist for two dollars. 02:29.190 --> 02:30.030 Etherial. 02:31.370 --> 02:41.780 You can see that there was a couple of rectangles here on the hourly chart, and you will get them more 02:41.780 --> 02:48.110 frequently, obviously on shorter time frames, but there should be no doubt that those were both profitable 02:48.110 --> 02:55.670 trade because you're only looking for twice the move are twice the height of the rectangle for the move. 02:56.240 --> 02:57.910 Clearly, that was not an issue. 02:58.310 --> 03:00.530 You can see that support breaks. 03:01.220 --> 03:07.260 The reverse of that recent trend tends to be pretty brutal. 03:07.280 --> 03:12.140 And again, you should be able to get twice in a continuation move. 03:13.520 --> 03:20.720 There are already a lot of people on this side of the move in this case going higher into this, so 03:20.750 --> 03:26.000 that would be one reason to think that maybe the momentum isn't going to be as quick. 03:26.210 --> 03:29.850 You'll probably be more apt to get the occasional pullback. 03:30.430 --> 03:34.010 Now, keep in mind, this is on the hourly chart. 03:35.040 --> 03:42.840 So, you know, you need to look for quicker moving indicators, you can see where you got a crossover 03:42.840 --> 03:47.640 here, signal crossover in the Makdisi both times. 03:48.090 --> 03:52.940 And then by the time we broke down, we were starting to scream towards the zero line. 03:53.490 --> 03:57.160 So that would have been something that would have caught your attention. 03:57.700 --> 04:03.810 Furthermore, on the second one, this would have been an area where we had seen resistance recently. 04:04.560 --> 04:12.000 So you can see how using some of these indicators can give you an idea as to, OK, not only is the 04:12.000 --> 04:17.810 pattern setting up, not only have we, you know, in this case broken through support or broken through 04:17.810 --> 04:24.270 resistance on or on a rectangle bottom, but now you have people who pay attention to Magdy D, paying 04:24.270 --> 04:26.580 attention to it, et cetera, et cetera. 04:27.690 --> 04:33.570 In the next video, I'll be talking about head and shoulders, one of the trading community's favorite 04:33.570 --> 04:34.200 patterns.