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Psychology and description of Cup and Handle PatternHi every one Kindly like the ideas if it is helping you and leave a comment Psychology of Cup and Handle Pattern: The psychology of the cup and handle pattern is as follows: The "U" part of the cup is where prices slowly fall, this wears out speculators. This is usually illustrated be a decrease in volume on the left side of the cup. Once prices reach a level where institution and strong hands find value, they will begin to accumulate the stock, shown by an increase in volume . However, once prices reach the levels of the left side of the lip of the cup that acts as an area of resistance, traders begin to sell. This selling creates the handle portion of the pattern. Traders attempt yet again to reach the resistance area that is the price level of the lip of the cup. If prices surpass this resistance area , then a multi-month long consolidation is over and prices are free to continue their rise. This breakout also gathers the attention of momentum traders who bring in even more volume to add strength to the breakout. However, if prices failed to breakout, then a solid area of resistance that has been tested three times now and has held has been established which is very bearish for the chart. Inverse Cup and Handle: The other variant of the cup and handle is the inverse cup and handle . The trend direction prior to the pattern can either be upward or downward , There after prices rise gently and slowly create a curved top and then gently move back down creating a long term dome "n". The handle portion is a retracement upward from the right side of the cup (called the lip) and then a reversal downward toward the price level bottom of the left side of the cup's lip; it is usually a sharper peak like the caret symbol "^" and does not rise in distance as far as the cup portion's highest high. A sell signal is triggered when prices surpass the low of the bottom of the right side of the cup. Traders, if you liked this idea or have your opinion on it, write in the comments. I will be glad Thank you for seeing idea . please support us Good luck.
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by CobraVanguard
17
The Cup and Handle Chart PatternCup and Handle Chart Pattern The cup and handle chart pattern is a bullish continuation pattern that marks a consolidation period followed by a breakout. It can help to predict future price movements. A cup and handle chart pattern is comprised of three main components: -A prior trend, as to qualify as a continuation pattern it has to have a prior trend -The cup, "U" shaped resembling a bowl or rounding bottom with almost equal heights on the either side -The handle, as the cup formation is completed, a trading range develops on the right-hand side forming the handle, usually 1/3rd of the size of the prior advance In this chart pattern, there is a prior trend followed by a cup forming with almost of the equal heights on either side with a low in observed nearly in the middle. After the low, the rice consolidates to reach near the high of the start of the cup, followed by a pullback forming a handle, similar in shape to a flag or pennant. Once the handle reaches back to the same level of the cup highs, a breakout is expected, confirming with spikes in the volume observed. Traders can use the cup and handle to buy when the breakout is observed i.e. at the candle when price breaks the highs formed by the cup. For confirmation, traders can use the sudden increase in volume as the cup and handle completes and the breakout is observed. Traders can put stop loss at the low of the handle in order to minimize the losses if the pattern fails, There are few limitations as well to the Cup and Handle Pattern: -Can be difficult to be observed for novice traders -Often might require assistance from other technical indicators -The cup and handle might take extensive periods to play out and complete the formation ---------------------------------------------------------------------------------------- If you find the post useful, please like and share our ideas with the community! - Mudrex
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by Mudrex
7