Unlock Your Market Wizardry: Conquer the 2025 Chartered Market Technician (CMT) Test!

Question: 1 / 400

A valid rectangle pattern requires how many price movements within its boundaries?

At least two

A valid rectangle pattern within technical analysis indeed requires at least two price movements within its boundaries. This pattern is characterized by price oscillating between two horizontal levels: a support level at the bottom and a resistance level at the top. To establish the rectangle, the price must hit the support level and bounce upwards at least once, and then subsequently reach the resistance level and reverse downward at least once as well.

Thus, the presence of at least two price movements—one towards the resistance and one back towards the support—validates the formation of the rectangle by demonstrating that there is a price range within which the security is trading. This oscillation showcases the buying and selling pressure at these levels and is essential for traders to determine possible reversal points or trade breakout opportunities when the pattern is ultimately breached in either direction.

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At least three

One

More than five

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