CUP AND HANDLE

By -

CUP AND HANDLE

 

The cup and handle formation (also called the cup with handle formation) is a bullish chart pattern that is defined by a chart where a stock drops in value, then rises back up to the original value, then drops a small amount in value, and then rises a small amount in value.

CUP HANDLE
WWW.FURTHERGROW.IN

The cup and handle formation (also called the cup with handle formation) is a bullish chart pattern that is defined by a chart where a stock drops in value, then rises back up to the original value, then drops a small amount in value, and then rises a small amount in value.

THERE ARE TWO TYPES OF CUP AND HANDLES 

1.) BULLISH

2.)BEARISH

                                       BULLISH

CUP HANDLE
WWW.FURTHERGROW.IN


BEARISH

CUP HANDLE
WWW.FURTHERGROW.IN

 Important characteristics

• Trend: A cup and handle formation should follow an increase trend, ideally one that is only a few months old. The older the increase trend, the less likely it is that the cup and handle will be an accurate indicator.

• Shape: In a cup and handle formation, the cup must always precede the handle. The cup should form a rounded bowl shape, with an obvious bottom. A V-shaped bowl is said to be avoided. The cup should be fairly shallow, and ideally should retrace about 30% to 50% of the previous increase.  The perfect pattern would have equal highs on either side of the cup, but this is not always the case.


CUP HANDLE
WWW.FURTHERGROW.IN
WWW.FURTHERGROW.IN
• Duration: The cup should last 1 to 6 months, while the handle should only last for 1 to 4 weeks. These are only approximate values, however; a cup may last anywhere from a few weeks to a few years.

• Volume: The volume of the stock should decrease along with the price during the cup and should increase rapidly near the end of the handle when the price begins to rise.


CUP HANDLE
WWW.FURTHERGROW.IN

 Significance for traders

 A cup and handle formation is considered to be a bullish signal, and is usually followed by a sharp rise in value. A rather accurate estimation of the expected price rise is found by measuring the price rise from the bottom of the cup to the right side. The reason for a price rise following a cup and handle formation is largely unknown. Likely because many traders know about this signal and buy when they see it forming thus artificially creating the bullish uptrend.

**********
Location: United States

Comments

Post a Comment

Popular posts from this blog

OPTION STRATEGIES

By -
Image
OPTION STRATEGIES Options allow the investor to sculpt the returns in their portfolio. When you buy a stock and the price rises $1, you make $1. You lose $1 if the price declines $1. Your profits are linear and directly related to only the change in the price of the stock. Interest and dividends will make a slight change to the outcome though these factors are also linear. Options blow apart this linearity. Options are called convex instruments because the returns are not linear but curved. We saw that in the previous chapters. You can literally create millions of possible returns through the use of options. You can mix and match options to create just about any return possible.   Selecting a strategy is a multi step process. You should go through a systematic process before initiating a trade. Each step should lead to further refinement of the strategy. It can be very dangerous to your bank account to disregard some or all of the major factors that affect options prices.
Read more

Parametric Techniques on Other Distributions- USING THE PARAMETERS TO FIND OPTIMAL F

By -
Image
Parametric Techniques on Other Distributions USING THE PARAMETERS TO FIND OPTIMAL F Now that we have found the best-fitting parameter values, we can  find the optimal f on this distribution. We can take the same procedure  we used to find the optimal f on the Normal Distribution . The only difference now is that the associated probabili ties for each standard value (X value) are calculated per the procedure . With the Normal Distribution,  we find our associated probabilities column  by using equation. Here, to find our  associated probabilities, we must follow the procedure detailed previ ously: 1. For a given standard value, X, we figure its corresponding N'(X) . 2. For each standard value, we also have the interim step of keeping a  running sum of the N'(X) 's corresponding to each value of X. 3. Now, to find N(X), the resultant probability for a given X, add  together the running sum corresponding to the X value with the running  sum corresponding
Read more

OPEN HIGH LOW STRATEGY IN DAY TRADING

By -
Image
OPEN HIGH LOW STRATEGY  IN DAY TRADING This is a very popular Intraday Open High Low Strategy with pretty good Accuracy. In this strategy, Buy signal is generated when a Stock or Index has same value for Open and Low, while Sell signal is generated when it has same value for Open and High.   The open high low same strategy is quite popular among Indian stock traders. In fact, I am watching this strategy for 6-7 years now and this is really easy to follow strategy for even novice traders. This strategy works well in all liquid scrips but I suggest you follow only Nifty 50 stocks with this strategy. To be successful in Intraday trading having a tried and tested strategy is very important. The open high low strategy is one of the famous strategies which has high accuracy, many people use this strategy on a day to day basis. Selecting stocks plays a major role in intraday trading, there are various strategies to select stocks for day trading. w
Read more