A rectangle is a range: price bouncing between a horizontal support and a horizontal resistance, going nowhere net. Most of the time, markets are ranging rather than trending, so reading boxes well is one of the most practical skills in technical analysis.
Two ways to trade a box
Inside the range, you can fade the edges — buy support, sell resistance — treating the box as the playing field. Or you can wait for the breakout and trade the new trend that follows. The two approaches are opposites: range-trading bets the box holds; breakout-trading bets it breaks. Decide which game you are playing before you enter, not after.
The break
A genuine breakout closes beyond the box on rising volume and ideally retests the broken edge from the other side. A quiet poke beyond the range that snaps back is a false break — extremely common at range edges, because that is exactly where stops are pooled (the liquidity lesson). The longer and tighter the range, the more significant the eventual break tends to be.
Continuation context
A rectangle that appears mid-trend (a sideways pause) is a continuation pattern and usually breaks in the trend's direction. A rectangle after an extended move can be distribution or accumulation that resolves into a reversal. The surrounding trend, again, is the deciding context.