Cup and Handle Chart Pattern: How To Use It in Crypto Trading

You might think that the opposite of a panic-driven exit would be a good thing. An upward-sloping handle is flawed; it represents weak demand as new buyers move into the stock at a trickling pace. During the https://www.bigshotrading.info/blog/cup-and-handle-pattern/ stock’s actual breakout, you want to see a new wave of buyers coming in at a torrid pace, not a trickling one. HaiKhuu LLC was officially established in January 2018 by the Founder and CEO, Allen Tran.

The subsequent recovery wave reached the prior high in 2011, nearly 10 years after the first print. If seeking an early point, then be sure to enter with partial share size to minimize risk. Its concept can be applied across markets which are liquid and across timeframes when the market is liquid as well. If you’re entering on the 4-hour timeframe, then a factor of 6 would be, 4 multiply by 6, which gives you 24 hours, and that’s the daily timeframe. If you’re long, you want to exit your trades before the swing high or Resistance. With this in mind, you can trail your stop loss on the previous swing low because if the market wants to continue higher, the previous swing low shouldn’t be “broken”.

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This can help you gauge the overall market trend, only to tell if the pattern formation is going in the right direction or not. If you are viewing the pattern on a daily chart, make sure that as the https://www.bigshotrading.info/ forms, the price levels are always above the 50-day or the 200-day moving averages. The cup and handle is a bullish continuation pattern that marks a consolidation period followed by a breakout. It is considered a signal of an uptrend in the stock market and is used to discover opportunities to go long.

The cup and handle is considered to be a bullish signal in technical analysis. Continually scanning hundreds of charts to detect this pattern is challenging and time-consuming, but we’ve got you covered! Just sign up for your Wagner Daily PRO membership to receive the best swing trade alerts for the cup and handle and other top patterns. We also alert you to this pattern with Morpheus Crypto PRO service.

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The inverse, or inverted, cup and handle pattern shares exactly the same logic as the standard cup and handle pattern, but in reverse. As you can see, this provided the perfect exit level in the first cup and handle pattern. This represents the breakout point from the cup and handle’s resistance line – which connects all 3 peaks. Really, the only rule worth following is that the cup should take longer to form than the handle. So, if the cup took 8 weeks to form, the handle formation should take no longer than this.

• The founder of the term, William O’Neil, identified four primary stages of this technical trading pattern.
• To reiterate, different zones of the cup and handle pattern are supposed to show different volume metrics.
• The cup and handle chart pattern marks a consolidation period in a stock followed by a breakout and suggests a continuation of the uptrend in a security’s price movement.
• The “handle” is the relatively flat part of the pattern that develops after the price has rallied back to the prior high and consolidates.
• When price breaks out of the handle’s trading range, it signals a continuation of the prior trend.
• It is considered a signal of an uptrend in the stock market and is used to discover opportunities to go long.

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