Ever Thought a Cup and Handle Could Change the Way You Trade?

Let’s break down this classic chart pattern and show you why it’s a game changer!

What is the Cup and Handle Pattern?

The cup and handle pattern literally looks like a cup and a handle on a security's price chart where:

• The cup is in the shape of a "U."
• The handle has a slight downward drift.

What Does It Tell You?

• When a stock reaches its previous high, traders who bought earlier may start selling, causing the price to pause or dip slightly for 4 days to 4 weeks.
• This forms a "cup and handle" pattern, which is a bullish signal, showing a good buying opportunity as the price is likely to rise afterward.

How to Trade the Cup and Handle Pattern?

1. Place a Stop-Buy Order

   • Place a stop-buy order just above the handle's upper trendline.
   • Only let the order activate if the price breaks the resistance level. Entering too early might lead to a fake breakout and extra costs.

2. Avoid Risky Cups

   • Avoid 'V'-shaped or very deep "U" cups while trading. These are less reliable patterns.