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Consolidation Box Breakouta rectangle with four touches

Evidence: ModerateBeginnerBreakout · Price action

A consolidation box is two horizontal lines that price has respected at least twice on each side. It is the halfway house between a trendline and a session range: drawn by hand like the first, but horizontal and objective like the second.

The touch count is what makes it a level rather than a rectangle. Two touches each side minimum — and the more touches, the more orders sit beyond it.

The evidence here is for what happens when resting orders trigger, not for this way of drawing the level. The level is a choice; the cascade behind it is the mechanism.

Category
Breakout · Price action
Timeframe
M15 primary · H1 to find the box
Suitable pairs
EURUSD · GBPUSD · XAUUSD · NAS100
Session
London and New York
Indicators / tools
Horizontal levels with a tolerance band · ATR(14) · a bar counter for the box length

Valid setup

BO-10 · CONSOLIDATION BOX BREAKOUT — VALID SETUP XAUUSD · M15 · four touches over thirty bars, then a close outside by more than 0.25 × ATR LONG 4386.69 4395.84 4404.98 4414.13 4423.27 4432.42 4441.56 THE BOX — four touches, under 1.5 × ATR tall TP1 = 1 × box height 1R TP1 = box height projected ENTRY = close outside by 0.25 × ATR BOX HIGH STOP = the far side of the box 1 2 3 4 5 4430.00 4415.00 4411.00 4392.00 ① First touch of the top — not a level yet ② Touches on both sides: the box is forming ③ Four touches over thirty bars, and narrow enough ④ Close above the box by more than 0.25 × ATR ⑤ Stop on the far side of the box ⑥ TP1 at one box height projected from the break

Exact rules

Entry

  • The box needs at least four touches — two on each side — within a tolerance of 0.25 × ATR(14).
  • Length filter: at least fifteen bars. A three-bar pause is not a consolidation.
  • Height filter: the box must be narrower than 1.5 × ATR(14). A wide box is a range, and ranges belong in the mean-reversion book.
  • Trigger: an M15 close outside the box by more than 0.25 × ATR. Enter at that close.
  • A wick outside with the close back inside is a sweep — skip it and look at the reverse.

Stop loss

  • The opposite side of the box, or 1 × box height, whichever is tighter.
  • If price closes back inside the box, the break has failed. Leave.
  • Risk 0.5%–1%.

Take profit / exit

  • TP1 = 1 × box height projected from the break, half the position.
  • TP2 = 2 × box height, or the next structural level.
  • Time exit after twenty bars — a break that has not run by then was not one.

Build Consolidation Box Breakout

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More from Breakout

Opening Range Breakoutthe first thirty minutes set the dayATR Channel Breakouta level that moves with volatilityTrendline Breakoutthe level you drew yourself

Trading carries risk and most retail accounts lose money. Nothing on this page is financial advice or a recommendation to trade. The chart is an illustration of the rules on constructed candles — it is not a record of a trade and not a backtest.