Cup and Handle
What is it ?
- a reversal pattern,but more obvious at the bottom rather than at the top.
- Basically looks like a coffee cup with a handle.
- There is a basing stage,accumulation phase(cup),then a breakout,followed by a pullback,forming what looks like a handle.
- Breaking out of the top of the cup is confirmation of a change in trend.
Few criteria
- The cup should be more rounded than a "V".
- The handle should be in the top part of the cup,not too deep.
- Cup pattern should take at least 7weeks to form.
- Volumes should contract in the handle and expand on b/out.
How to Trade
- Buy is at the area where the top of the cup is taken out.
- Stops at the low of the handle.
- Target : Measure the distance to the low of the cup.Add that to the breakout area.
