Cup and Handle Chart Pattern Tutorial with Example below !
Stay Tuned ! In the next educational post i will write about psychology of trading Chart Patterns and strategy of How to successfully trade few chart patterns in detail.
Cup & Handle : Cup & Handle Pattern can be seen both as a bullish continuation or bullish reversal pattern. A bullish continuation C&H pattern forms when there is a preceding uptrend followed by consolidation period in the shape of a Cup and a Handle look pattern and then the uptrend continues after breakout. On the other hand, a trend reversal Cup & Handle pattern forms after a preceding downtrend, then after completition of the pattern the trend reverses after a successful breakout.
Inverted Cup & Handle Pattern : Inverted Cup & Handle Pattern is the opposite of C&H pattern, Inverted C&H pattern is a bearish continuation or a bearish reversal pattern. A bearish continuation C&H pattern forms when there is already a preceding downtrend and after a Inverted Cup & Handle pattern is formed followed by a breakout the bear trend continues. On the other hand, a bearish reversal Inverted Cup & Handle Pattern forms after a preceding uptrend, then after completion of the pattern the trend turns to a bearish trend from a bullish trend after a successful breakout of the pattern.
(In the Above they are Trend continuation Cup & Handle and Inverted Cup & Handle Patterns and below are the Trend Reversal C&H and Inverted C&H Patterns)
The Cup & Handle Pattern can be form in any timeframe from few minutes to hours, daily or weekly and even monthly candle charts. The price targets are measured from the verticeal distance from the bottom to the high of the Cup looked shape then this distance projected from the breakout point. Like all the chart pattern you need to confirm the breakout with Volume Indicator. Sometimes in a cup & handle pattern, only the cup shape forms and do not form the handle shape or we can say it rounded bottom or rounded top for Inverted C&H pattern.
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Cup & Handle as Reversal Pattern
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Example : Inverted Cup & Handle in uptrend (Bearish Reversal)
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Example : Cup & Handle in Uptrend (Trend Continuation)
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Cup & Handle in Downtrend (So, Trend Reversal Pattern)
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Example : Rounded Bottom Pattern (As i told in descreption that sometimes the handle shape doesn't form, this is an example of that!)