Cup and Handle chart patternThis chart pattern is shaped like and resembles like a cup and handle that's why its named the same as cup and handle chart pattern.
Shape:
A “U” shaped bottom is preferred over a “V” shaped bottom as it indicates more consolidation. Ideally, the highs on either side of the cup should be equal.
Duration of formation:
The cup can take anywhere from 1 to 6 months to form, while the handle should take 1-4 weeks.
Confirmation:
The pattern is confirmed as bullish when the price breaks above the previous highs (the neckline) with strong volume. A buying opportunity arises when the price moves above the old resistance level (right side of the cup).
Volume:
Volume should decrease as prices fall to form the base of the cup and remain below average. As the price begins to rise again, volume should increase.
Target:
The profit target is calculated based on the depth of the cup. Measure the distance from the bottom of the cup to the neckline and extend that distance upward from the breakout level.
Also it can give sometimes three times of depth of the cup.
Risk Management:
A stop-loss can be placed at the bottom of the handle or below a swing low within the handle if there were multiple price oscillations.
I am not sebi registered analyst. My studies are for educational purpose only. Please Consult your financial advisor before trading or investing. I am not responsible for any kinds of your profits and your losses.
Thanks
RK💕
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Disclaimer and Risk Warning.
The analysis and discussion provided on in.tradingview.com is intended for educational purposes only and should not be relied upon for trading decisions. RK_Charts is not an investment adviser and the information provided here should not be taken as professional investment advice. Before buying or selling any investments, securities, or precious metals, it is recommended that you conduct your own due diligence. RK_Charts does not share in your profits and will not take responsibility for any losses you may incur. So Please Consult your financial advisor before trading or investing.
