Cup and Handle Pattern - All Hope is not lost, yet.
Updated
With bitcoin experiencing a downtrend for the last three days, the cup and handle (C&H) pattern remains one of the most probable doses of hopium for a bullish continuation (bulls and underwater longs will be grateful). Price made the high of the week running into diagonal resistance from the 14K high made in June 2018 and immediately got rejected. All support seems to be failing as price makes its way aggressively to the downside to what appears to be the neckline of the Inverted Heads and Shoulders that had formed over a 42 days period. If the neckline support fails to hold and flips to resistance, it could spell doom for bulls as we may experience new lows by the end of January IMO .
All hope is not lost (yet) for the bulls as current price action and a few indicators seem to favor the formation of a cup and handle pattern should neckline support hold and price reverses at that level.
Here are a few things you need to know about the cup and Handle pattern and how current PA is indicative of its formation/confirmation in a few days:
Characteristics of a Cup and Handle pattern
An asset forming C&H pattern tests old highs, it is likely to incur selling pressure and is likely to make price consolidate with a tendency toward a downtrend trend for a period of four days to four weeks, before advancing higher.
1. Length - Generally, cups with longer and more "U" shaped bottoms are a stronger signal. The current cup is more of a "U" shape than a V shape which is a good sign.
2. Depth - Ideally, the cup should not be overly deep. The good thing about PA is that on the daily chart the Head of Inverse H&S pattern was not overly deep therefore making the cup fit this criteria.
3. Avoid handles that are overly deep also, as handles should form in the top half of the cup pattern.The ideal confirmation will be price bouncing off the neckline or close below and immediately above the neckline.
4. Volume - Volume should decrease as prices decline and remain lower than average in the base of the bowl; it should then increase when the asset begins to make its move higher, back up to test the previous high. This is my favorite part with current PA. Volume increased with price from 4 to 8 January (ish) and then started declining with price as well. To validate the C&H pattern, volume would have to increase significantly with a successful retest of the neckline.
Finally, as with all technical indicators, the cup and handle should be used in confluence with other signals and indicators before making a trading decision. So let's look out for possible bullish divergences/Hidden bullish divergences on major timeframes, oversold RSI and oversold Stochastic RSI.
Please note that this remains a meme till confirmed. Be careful. Godspeed.
Notes were taken from online resources.
All hope is not lost (yet) for the bulls as current price action and a few indicators seem to favor the formation of a cup and handle pattern should neckline support hold and price reverses at that level.
Here are a few things you need to know about the cup and Handle pattern and how current PA is indicative of its formation/confirmation in a few days:
Characteristics of a Cup and Handle pattern
An asset forming C&H pattern tests old highs, it is likely to incur selling pressure and is likely to make price consolidate with a tendency toward a downtrend trend for a period of four days to four weeks, before advancing higher.
1. Length - Generally, cups with longer and more "U" shaped bottoms are a stronger signal. The current cup is more of a "U" shape than a V shape which is a good sign.
2. Depth - Ideally, the cup should not be overly deep. The good thing about PA is that on the daily chart the Head of Inverse H&S pattern was not overly deep therefore making the cup fit this criteria.
3. Avoid handles that are overly deep also, as handles should form in the top half of the cup pattern.The ideal confirmation will be price bouncing off the neckline or close below and immediately above the neckline.
4. Volume - Volume should decrease as prices decline and remain lower than average in the base of the bowl; it should then increase when the asset begins to make its move higher, back up to test the previous high. This is my favorite part with current PA. Volume increased with price from 4 to 8 January (ish) and then started declining with price as well. To validate the C&H pattern, volume would have to increase significantly with a successful retest of the neckline.
Finally, as with all technical indicators, the cup and handle should be used in confluence with other signals and indicators before making a trading decision. So let's look out for possible bullish divergences/Hidden bullish divergences on major timeframes, oversold RSI and oversold Stochastic RSI.
Please note that this remains a meme till confirmed. Be careful. Godspeed.
Notes were taken from online resources.
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Look out for this rangeAppreciate the likes.
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I guess this will be my last update on this piece. I appreciate you taking the time to read this and the likes it got.
Luckily for us longs, we did not have to endure the self-doubt that would have accompanies the formation of the handle. Bitcoin did what bitcoin does.
I hope you held on to your long through that or at least you were in spot.
We are at a key level now with bitcoin confronting the 200MA which was major barrier early 2018.
There is what appears to be a bull pennant forming on the 30 min chart.
I hope we all make it friends.
Godspeed
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