There are different methods to calculate targets after a break from a cup and handle
These patterns are very common in a bull market, although there are also inverted cup and handles in down trends. They are relatively easy to spot
I do not like the handle to dip down more than a third of the cup depth. At that point, I could possibly be dealing with a down trend and is why mid cup level is important too..so you can get an idea on how far the handle had actually dipped. Roku invalidated the C&H pattern when it reached down more than the desired pull back to fill a gap, and subsequently became a triangle pattern . Things can change!
Sometimes the 2 cup peaks can be mistaken for a double top ...so be sure to analyze that.
I know some who use the break from the handle (appears like a flag or pennant ) as their break out point in order to get more of the move and nothing is written in stone. I have bought half a position at handle break and the other half at the cup peak in the past. Every stock is different and sometimes you just feel it in your bones, that the stock will break out (dangerous thinking I guess, But you know what I mean..lol)
I have found that the less the handle dips, the more powerful the move up is as well. AAPL had a very small handle and made a very powerful move
I like to trade a more rounded bottom (but have trouble drawing them on here ) verses a V cup as well. To me it means the stock had time to really consolidate and ripen.
Every stock is different so I play it by ear but my targets are based on the depth of the cup. My first target is 75%( ish ) of the length from 1 to 2 and my 2nd target is the entire length from 1 to 2. My targets may end up being 60% and 150% instead, depending on the stock
I measure from the point I use as break out so targets would differ a bit if you calculated from the handle break or the cup peak
I am not good at drawing Fibonacci retracements but I do know they are a good tool to use to calculate targets
On a super volatile stock, I may use mid cup as a stop if I wish to hang on to it for a while...examples: ROKU, SEDG but in formation, This pattern can take weeks or months to form but those that day trade also use it in lower time frames so it would form quickly.
Good luck!
These patterns are very common in a bull market, although there are also inverted cup and handles in down trends. They are relatively easy to spot
I do not like the handle to dip down more than a third of the cup depth. At that point, I could possibly be dealing with a down trend and is why mid cup level is important too..so you can get an idea on how far the handle had actually dipped. Roku invalidated the C&H pattern when it reached down more than the desired pull back to fill a gap, and subsequently became a triangle pattern . Things can change!
Sometimes the 2 cup peaks can be mistaken for a double top ...so be sure to analyze that.
I know some who use the break from the handle (appears like a flag or pennant ) as their break out point in order to get more of the move and nothing is written in stone. I have bought half a position at handle break and the other half at the cup peak in the past. Every stock is different and sometimes you just feel it in your bones, that the stock will break out (dangerous thinking I guess, But you know what I mean..lol)
I have found that the less the handle dips, the more powerful the move up is as well. AAPL had a very small handle and made a very powerful move
I like to trade a more rounded bottom (but have trouble drawing them on here ) verses a V cup as well. To me it means the stock had time to really consolidate and ripen.
Every stock is different so I play it by ear but my targets are based on the depth of the cup. My first target is 75%( ish ) of the length from 1 to 2 and my 2nd target is the entire length from 1 to 2. My targets may end up being 60% and 150% instead, depending on the stock
I measure from the point I use as break out so targets would differ a bit if you calculated from the handle break or the cup peak
I am not good at drawing Fibonacci retracements but I do know they are a good tool to use to calculate targets
On a super volatile stock, I may use mid cup as a stop if I wish to hang on to it for a while...examples: ROKU, SEDG but in formation, This pattern can take weeks or months to form but those that day trade also use it in lower time frames so it would form quickly.
Good luck!
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.