From the Wizard of Rambus

This short term daily chart for GLD shows its April rectangle trading range. If we used the blue circles, symmetry failures of the top and bottom rails, we will have completed 5 reversal points so far with a touch of the top rail completing the all important 6th reversal point putting the rectangle back into the consolidation pattern category. Many times the last reversal point inside of a rectangle will start from the center dashed midline and not the bottom trendline.
Most traders don’t understand the concept of a consolidation pattern. In order to have a consolidation pattern you first have to have a rally that comes to and end where you can labeled that first high as the first reversal point. That high is then followed by a decline that finds a low and then reverse back up toward the first reversal point. You can then label the first low as reversal point #2. This is where it gets hard for many investors that don’t understand the principals of how a consolidation pattern is formed. There has to be at least one more decline toward the bottom of the new trading range that is setting up with the completion of the first and second reversal points. It’s this second decline that investors begin to question whether they made a mistake and their emotions begin to kick in. If you understand the process you look for that second decline and look for where a possible low may form. If that low you were looking for holds then you know you have a shot at forming a consolidation pattern which will be confirmed when the price action breaks out above the top rail connected by reversal points #1 and #3.
What is really hard on investors emotions is when you end up with 6 or more reversal points in a consolation pattern. Four reversal points is about as many as most investors can take before they throw in the towel, but throw 2 more reversal points in the consolidation pattern then they are totally devastated and sell out to relieve their discomfort from the emotional rollercoaster ride. This daily chart for GLD is a good example of that emotional rollercoaster ride. We will be on this rollercoaster ride until either the bulls or bears win the battle of the April rectangle.