Range Trade-When the support and resistance lines are relatively horizontal, or sideways, the channel is called a trading range. There is no directional bias in a trading range; therefore, you can enter new long positions in the support zone and enter new shorts in the sell zone. Penetration of either the support or resistance lines forces liquidation of the trade and establishes a new trend direction.
The exit from the chart pattern, called a breakout, is downward in this example, but can be in any direction for rectangles. I highlight the breakout location in the figure. Price must close below the bottom of the rectangle to stage a downward breakout.