How to trade Cup and Handle pattern

Cup and Handle Chart Pattern Explained 

• The Cup and Handle pattern as well as the Inverted Cup and Handle pattern are both trend reversal chart patterns.

• In which Cup and Handle is a bullish trend reversal chart pattern.

• And Inverse Cup and Handle is a bearish trend reversal chart pattern.

• In this article, we will discuss about the cup and handle pattern. 

• If you don't know how to trade the cup and handle chart pattern, Then this article will help you lot.

• You can increase your knowledge about the technical analysis by reading this article.

CUP AND HANDLE CHART PATTERN 

• The cup and handle is a bullish trend reversal chart pattern that formed at the bottom after the end of a downtrend.

• This pattern appears as a cup and handle, with the cup in the shape of the letter "U" and the handle having a slight downward drift.

• The blue coloured horizontal line in the image is called the "neckline".

• After successfully breakout the cup and handle pattern, the trend is reversed to the upside.

• Therefore, this pattern is called the bullish trend reversal chart pattern.

• How is the cup and handle pattern formed?

• Let's first divide the Cup and Handle pattern into four parts: 1, 2, 3, and 4.

Part : 1

• When the price moves down, it forms a LL-LH price action.

• bear in the market. 

• It means the sellers are stronger than the buyers.

Part : 2

• In the second part ( bottom of the cup), the price is consolidated within the range.

• It means there is indecision between the buyers and the sellers.

• Finally, buyers take control from the sellers and break the range (consolidation area) to the upside.

Part : 3

• After breaking the range, the price goes up and forms a HH-HL price action. 

• It means the buyers are stronger than the sellers.

• Part 2 is the point , where the price action shifts from LL-LH to HH-HL.

Part : 4

• The handle is basically the retracement before the breakout.

• How to trade the cup and handle pattern?

• The cup and handle pattern is activated when the price action breaks above the neckline.

Entry :

• Take entry when candle is closed above the neckline. 

Target :

• The target should be equal to the distance between the neckline and the bottom of the cup.

Stop Loss :

• SL should be placed below the bottom of the handle. 

SHORT QNAs  

1) What is cup and handle pattern?

• The cup and handle is a technical analysis chart pattern that indicates a change in trend. 

2) Is cup and handle bullish pattern? 

• Yes, a cup and handle is a bullish chart pattern. 

3) What is the opposite of cup and handle pattern?

• The opposite of the cup and handle is the inverse cup and handle pattern, which formed at the top. 

4) Cup and handle pattern is a signal of _______.

• bullish trend reversal

5) What is the success rate of cup and handle pattern?

• The success rate of the cup and handle pattern is approx 70-80%.

6) What is cup and handle target price? 

• The target should be equal to the distance between the neckline and the bottom of the cup.

7) What is cup and handle stop loss price? 

• The SL should be placed below the bottom of the handle. 

Thanks For Reading Article....... 📝

Read More >>

• Inverse Cup and Handle Chart Pattern

• Triple Bottom Chart Pattern

• Inverted Head And Shoulder Chart Pattern

• Double Bottom Chart Pattern