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Cup and Handle

The document describes the cup and handle pattern, a technical chart pattern that signals a continuation of an uptrend. It consists of a cup-shaped dip followed by a handle with a slight downward drift. For a bullish pattern, the price moves higher after breaking above the resistance level at the top of the cup. Traders can enter long positions aggressively after the trendline breakout or conservatively after the resistance break and high volume confirmation. The target is from the bottom of the cup to the resistance level.

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Vinay Kumar
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2K views9 pages

Cup and Handle

The document describes the cup and handle pattern, a technical chart pattern that signals a continuation of an uptrend. It consists of a cup-shaped dip followed by a handle with a slight downward drift. For a bullish pattern, the price moves higher after breaking above the resistance level at the top of the cup. Traders can enter long positions aggressively after the trendline breakout or conservatively after the resistance break and high volume confirmation. The target is from the bottom of the cup to the resistance level.

Uploaded by

Vinay Kumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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CUP AND HANDLE PATTERN

 A cup and handle is a technical chart pattern that resembles a cup and
handle where the cup is in the shape of a "u" and the handle has a
slight downward drift.
 It is a continuation pattern where a cup and handle is considered a
bullish signal extending an uptrend, and it is used to spot
opportunities to go long.
 It could also be a Reversal pattern which turns the trend from
downtrend to uptrend.(we are not discussing)
Conditions(continuation pattern)

 Before it forming cup and handle it should have a clear up trend.


 As price moves lower and then higher ,it forms the sides of cup and
eventually meets up with the previous high that forms potential resistance
 Target will be from bottom of the cup to the resistance level.
 The formation of handle after touching resistance level should not be more
than 30% of U shape.
 Pattern formation occurs between 6-8 weeks
Cup and handle pattern
Aggressive trade entry

 An aggressive trader can enter after the trend line breakout


 Stoploss will be bottom trend line(handle)
 Target will be from bottom of the cup to the resistance level.
 Probability of winning will be less but reward will be more
 Volume must confirm the trend .
Entry for conservative trader

 Entry point will be when price breaks that resistance level and
closes with high volume.
 Stop loss will be bottom of the trend line(handle)
 Target will be from bottom of the cup to the resistance level.
CUP AND HANDLE PATTERN RULES

 Look for a market that is reversing in a cup like formation , it should be downtrend
transitioning from uptrend.
 The retracement should be in U shape not in V shape or any other
 The cup formation should be 1/3 to 2/3 of previous trend
 The handle retracement should not be more than 30%
 If the stock fails to give a breakout there is an equal chance of going down to the handle
level or bottom of the cup(ex:Vedanta,Jindal saw)
 Same rules for reversal pattern(initiating from downtrend to uptrend)
Volume criteria
REFFERENCE

 Filatex
 Panama petrochemicals
 Ace

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