Started by RoboForex, May 06, 2022, 05:11 am
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This article is devoted to the Cup and Handle graphic pattern, providing the main information, such as how it forms and how to trade it.
Cup and Handle is a tech analysis pattern that forecasts the continuation of the current trend after the price stops consolidating.
The pattern was discovered and popularised by a famous trader and investor, author of several books on the stock market and the founder of a business newspaper Investors Business Daily William O'Neil.
Cup and Handle forms in an uptrend or downtrend; it is a correctional price movement that consists of two parts. The first part is the Cup and the biggest part of the correction, and the second part - the Handle - is the smaller finishing part.
The pattern can be bullish or bearish. The first one is the actual Cup and Handle that appears on the chart in an uptrend and signals about further growth of the quotes.
The bearish pattern is called Inverted Cup and Handle; it appears on the hart in a downtrend and signals about the continuation of the latter.
William O'Neil who discovered the pattern used it for trading stocks and preferred longer timeframes. He stated that the pattern on D1 should take 7 to 8 weeks to form.
However, this pattern is rather universal and can be used on various TFs with currency pairs, stock indices, oil, gold, and other liquid assets.
There are several factors potentially supporting the pattern:
The Cup and Handle pattern became popular thanks to a famous trader and investor William O'Neil. This tech analysis pattern of trend continuation is quite a rare occasion on charts.
Cup and Handle can be used for trading stocks and other liquid assets. Before using the pattern for real, practicing on a demo account is recommended.
See other price patterns in the Blog:
13 Most Popular Trading Chart Patterns
The post How to Trade by Cup and Handle Pattern appeared first at R Blog - RoboForex.
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