Software company Red Hat (NYSE:RHT - News) could be working on a square box base.

In late September, it looked like it was beginning a base. But a new weekly closing high the week of Oct. 16 broke up the pattern.

Red Hat then fell as it formed the current consolidation.

A square box lasts four to seven weeks. Red Hat is in week five.

Much like a flat base, a square box usually corrects in the 10% to 15% range. In this instance, Red Hat has corrected 12%.

There are a couple of differences between a flat base and a square box. A square box can be a week shorter than the flat base's five-week minimum. The square box also looks different. It has a boxy appearance rather than the sideways look of a flat base.

While the weekly chart shows neither distribution nor accumulation in the base, the daily chart leans to the accumulation side.

The Accumulation/Distribution Rating rose from B to B+ since the base began to form.

Should Red Hat spring up in fast trade, it would need to clear a 29.04 potential buy point.

One drawback is the Relative Strength line. It's moving sideways or a bit downward. You'd like to see it near highs before a breakout.