Cup With Handle: Everything You Need To Know About Handles In Bases Investor’s Business Daily

If you’re day trading, and the target is not reached by the end of the day, close the position before the market closes for the day. This pattern can occur both in small time frames, like a one-minute chart, as well as in larger time frames, like daily, weekly, and monthly charts. An upward-sloping handle is flawed; it represents weak demand as new buyers move into the stock at a trickling pace.

As the cup is completed, a trading range develops on the right-hand side and the handle is formed. A subsequent breakout from the handle’s trading range signals a continuation of the prior advance. The cup and handle is a bullish continuation pattern that marks a consolidation period followed by a breakout. It is considered a signal of an uptrend in the stock market and is used to discover opportunities to go long. Thus, the cup and handle pattern is seen as a bullish continuation pattern. When the price breaks above the trading range that forms the handle of the pattern, it is expected to also break above the resistance of the swing high of the cup and make a huge advance.

Stock Trading

NGTF started the pattern at the end of November 2018 and went into February of 2019. If it doesn’t, the stock’s momentum may not be enough to break https://www.bigshotrading.info/ through the higher resistance level. Technical traders often buy right when the stock climbs back to the pivot price — or the top of the handle.

• It is also known as the bullish cup and handle pattern, signaling a potential uptrend in prices.
• A bullish momentum in regards to the relative strength index is when the level is around 50.
• She has worked in multiple cities covering breaking news, politics, education, and more.
• For those unfamiliar with what a cup and handle chart looks like, the chart below is an ideal example of a Bitcoin cup and handle continuation pattern.
• Being able to measure the depth of the cup is necessary as it allows aggressive traders to identify the maximum profit potential.
• This handle looks nothing like the ideal pattern but serves the identical purpose, holding close to the prior high, shaking out short-sellers, and encouraging new longs to enter positions.

SoFi does not guarantee or endorse the products, information or recommendations provided in any third party website. At that point, it makes sense to exit the stock, even if the 7%-8% loss-cutting sell rule has not yet been triggered. The handle should also show a downward slope along at least a portion of its price lows, not an upward one.

How to recognise a cup and handle pattern?

It is very common for traders to invest after identifying patterns or flags. Pro traders can use fiber levels early on to place stop losses at specific levels. This approach is beneficial if you want to check where the handle can form without invalidating the bullish trend. However, if you look at the volume chart, the resistance breakout wasn’t supported by an increase in volume — a probable reason for the pattern failure. Let us now use everything we have on the Cup and Handle Pattern to look at real-world examples from the crypto and stock markets. If you’re looking to trade stocks and other assets online, one way to get started is by opening an investment account on the SoFi Invest® app.