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Cup With Handle

But the cup and handle pattern has a long history and was discovered by the famous trader, William J. Our team at Trading Strategy Guides is working hard to develop the most comprehensive guide on different chart pattern strategies. In order to understand the psychology of a chart pattern, please start here, Chart Pattern Trading Strategy step-by-step Guide. As the name suggests, the cup and handle pattern has a similar appearance to a teacup with a handle.

Unlike the bullish flag patternwhich is a continuation pattern, the Cup figure trading cup Handle pattern takes a lot of time to develop.

Profitable Cup and Handle Trading Strategy

You can also read the simple yet profitable strategy. What is Cup and Handle? The cup and handle pattern is a bullish continuation pattern.

He has provided education to individual traders and investors for over 20 years.

Now, this pattern typically has a run-up on the left side. So, the first Cup and Handle rule is that you need to have a previous trend.

Trading with the Cup and Handle Pattern

You need this in order to have a continuation pattern. The handle portion is a retracement downwards from the figure trading cup side of the cup. It can be contained inside two parallel lines, or it can take the shape of a smaller rounded bottom. Normally, the handle of a tea cup can take many shapes. This can be the same trading signals euro dollar on reading the price action for the Make money into an account and Handle formation.

  1. Cup with Handle Cup with Handle The Cup with Handle is a bullish continuation pattern that marks a consolidation period followed by a breakout.
  2. Cup and Handle Definition
  3. Cup with Handle [ChartSchool]
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Basically, we can sum up the Cup and Handle pattern into three key components: Previous bullish trend. And the Handle.

Today we will talk about a somewhat lesser known pattern but one that is still highly effective.

In the figure below, we have highlighted a real Cup and Figure trading cup pattern. Then understand the psychology behind this profitable trading pattern. The Psychology behind Cup and Handle Pattern Each of the two key components, the figure trading cup and the handle, triggers specific crowd behavior.

figure trading cup

The cup component forms as a result of the buying power drying out. The rounded bottom really shows the buyers are in control and thus new highs should be expected. The real trap comes from the handle component. This gradual and slow range is what will set the stage for the bullish trend to resume. People will think this is a double top which will trap some weak sellers when we finally break upwards.

Cup and Handle Definition

Obviously, the Cup and Handle pattern can figure trading cup the best profits on the daily time frame. The pattern can be traded on the lower time frames as well. The first step is to identify an uptrend and a rounded retracement into that bullish trend. That rounded bottom is the first component of the Cup and Handle pattern.

The strength and the longevity of the prevailing trend is important as it will determine the success of the trade. How deep the rounded bottom goes will also influence our potential profit. So far, so good.

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  • A cup and handle price pattern on a security's price chart is a technical indicator that resembles a cup with a handle, where the cup is in the shape of a "u" and the handle has a slight downward drift.
  • Overlay Description William O'Neil's Cup with Handle is a bullish continuation pattern that marks a consolidation period followed by a breakout.
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  • Profitable Cup and Handle Trading Strategy

Now we move to the second component of the Cup and Handle pattern and the second step of the Cup and Handle trading strategy. Step 2: Draw the second component of the Cup and Handle pattern — The Handle You can start drawing the handle once the cup component is finished.

Cup with Handle

Once you see the price moving away from the cup in a tight range you can start looking to draw figure trading cup handle. Next, we need to figure out an entry technique, which brings us to the next step of the Cup and Handle trading strategy.

figure trading cup

Second buy entry on the breakout of the initial peak from where we started drawing the cup. The next logical thing we need to establish for the Cup and Handle trading strategy is where to take profits.

figure trading cup

See below… Step 4: Take Profit equals the same distance in price as measured from the initial Cup peak to the bottom of the cup The ideal profit target for the Cup and Handle trading figure trading cup would be equal to the same distance in price as measured from the initial Cup peak to the bottom of the Cup.

The Cup and Handle pattern target maximizes the potential profit and it gives us the chance to capture the entire trend. You are simply projecting the same distance in price to the upside using as a starting point the initial Cup peak. The next important thing we need to establish is where to place your protective stop loss.

See below… Step 5: Place initial SL below the rounded bottom. After the second entry is triggered move both SL below the Handle swing low.

The initial stop loss is placed just below the round bottom.

Cup And Handle Chart Pattern (Technical Analysis Trading Tutorial)

One we enter our second buy order we can now safely move the SL for both positions below the Handle swing low. Conclusion Once you learn what is Cup and Handle pattern you have no more excuses not to have a chance to succeed in trading. In the technical analysis field, the Cup and Handle pattern is one of the most profitable chart patterns.

Trading the Cup and Handle Pattern for Best Results

The Cup and Handle trading strategy is providing you with an effective way to exploit this pattern. You can also read about Trader Profile Quiz.

figure trading cup

We hope that the Cup and Handle pattern examples provided throughout this article will improve your ability to spot this powerful pattern when trading real funds. Make sure you also don't miss our amazing Triple Top Chart Pattern Trading Strategy which is the ultimate reversal trading strategy that you can have in your trading arsenal.

Thank you for reading! Please leave a comment below if you have any questions about this strategy!

figure trading cup

Also, please give this strategy a 5 star if you enjoyed it! We specialize in teaching traders of all skill levels how to trade stocks, options, forex, cryptocurrencies, commodities, and more. Our mission is to address the lack of good information for market traders and to simplify trading education by giving readers a detailed plan with step-by-step rules to follow.

figure trading cup