Cup and Handle Pattern
Cup and Handle:Typically a bullish continuation pattern. Look for a breakout above the handle for a long entry.
Characteristics:
1. Cup Formation: The price forms a rounded bottom, resembling a "U" shape. This indicates a period of consolidation and accumulation.
2. Handle Formation: After the cup, there is a smaller downward drift or consolidation, forming the "handle." This is typically a shorter and less volatile movement.
3. Volume: Volume tends to decrease during the formation of the handle and increase during the breakout.
4. Duration: The cup can take several weeks to months to form, while the handle usually forms over a shorter period.
How To Trade
Entry: Enter a long position when the price breaks above the resistance level formed by the top of the cup.
Stop-Loss: Place the stop-loss just below the handle's lowest point.
Target: The target can be estimated by measuring the depth of the cup and projecting that distance upward from the breakout point.
Rounding Top Pattern
Rounding Top: Typically a bearish reversal pattern. Look for a breakdown below the support for a short entry.
Characteristics:
1. Shape: The price forms a rounded top, resembling an inverted "U" shape. This indicates a period of distribution and potential reversal.
2. Volume: Volume tends to decrease as the pattern forms and may increase during the breakdown.
3. Duration: The pattern can take several weeks to months to form.
How To Trade
Entry: Enter a short position when the price breaks below the support level formed by the bottom of the rounding top.
Stop-Loss: Place the stop-loss just above the highest point of the rounding top.
Target: The target can be estimated by measuring the height of the pattern and projecting that distance downward from the breakdown point.
