PRINCIPLES OF TRADING FIGURES CUP WITH HANDLE
One of the most popular figures of technical analysis among day traders is a cup with a handle.
This figure is so popular due to its fairly clear and specific rules, in addition, the figure gives an excellent risk/profit ratio.
How to identify the model?
The formation of the model is divided into 4 stages:
1. The price has been rising for some time;
2. After the correction begins to about half of the previous growth – this is how the bottom of the cup is formed;
3. Then the price starts to rise to the previous maximum and turns down, failing to break through the resistance – this is the handle;
4. Then the price goes to break the maximum again, after which it goes even higher, approximately to the height of the cup depth.
How long does the model take to form?
A cup with a handle is formed from a few weeks to six months – that is why it is suitable for a long-term trader. It is very important to form a handle, which should be completed within a month, otherwise it may mean that the upward movement is weak and there may not be a breakdown.
Characteristics of the cup and handle
A round cup indicates consolidation, whereas a V-shaped cup indicates a too sharp reversal, which is not good.
The depth of the cup should be equal to one-third to one-half of the previous upward growth.
The handle should not fall more than one-third of the cup gain. In addition, a short and weak drop in the handle signals that a breakout may be very bullish.
How to trade?
Entrance
The best entry point is the handle. At the moment, the price is falling and forming a downtrend, the trader should enter the transaction when the price breaks through this downtrend.
Profit goals
To determine the goal, you need to measure the distance from the bottom of the cup to the beginning of the handle – this distance is above the breakdown of the maximum and will be our goal.
In addition to the main method of determining the goal, you can use Fibonacci lines – the 100 percent line is considered a conservative goal, and the 162 percent is considered an aggressive one.
Stop Loss
No matter how well the figure is formed, do not forget about the risks and the fact that the price can turn against you at any moment.
Set the stop loss is set below the minimum of the handle, then you will protect yourself from large losses.
Conclusions
This figure is not in vain so popular, it is very profitable and has clear rules, which makes it easier to work. Be patient, because the figure is formed for several weeks, or even months. Do not go too early, without waiting for the formation of the cup and handle. Premature entry promises losses.
Who knows how to wait - gets everything!
Good luck!
This figure is so popular due to its fairly clear and specific rules, in addition, the figure gives an excellent risk/profit ratio.
How to identify the model?
The formation of the model is divided into 4 stages:
1. The price has been rising for some time;
2. After the correction begins to about half of the previous growth – this is how the bottom of the cup is formed;
3. Then the price starts to rise to the previous maximum and turns down, failing to break through the resistance – this is the handle;
4. Then the price goes to break the maximum again, after which it goes even higher, approximately to the height of the cup depth.
How long does the model take to form?
A cup with a handle is formed from a few weeks to six months – that is why it is suitable for a long-term trader. It is very important to form a handle, which should be completed within a month, otherwise it may mean that the upward movement is weak and there may not be a breakdown.
Characteristics of the cup and handle
A round cup indicates consolidation, whereas a V-shaped cup indicates a too sharp reversal, which is not good.
The depth of the cup should be equal to one-third to one-half of the previous upward growth.
The handle should not fall more than one-third of the cup gain. In addition, a short and weak drop in the handle signals that a breakout may be very bullish.
How to trade?
Entrance
The best entry point is the handle. At the moment, the price is falling and forming a downtrend, the trader should enter the transaction when the price breaks through this downtrend.
Profit goals
To determine the goal, you need to measure the distance from the bottom of the cup to the beginning of the handle – this distance is above the breakdown of the maximum and will be our goal.
In addition to the main method of determining the goal, you can use Fibonacci lines – the 100 percent line is considered a conservative goal, and the 162 percent is considered an aggressive one.
Stop Loss
No matter how well the figure is formed, do not forget about the risks and the fact that the price can turn against you at any moment.
Set the stop loss is set below the minimum of the handle, then you will protect yourself from large losses.
Conclusions
This figure is not in vain so popular, it is very profitable and has clear rules, which makes it easier to work. Be patient, because the figure is formed for several weeks, or even months. Do not go too early, without waiting for the formation of the cup and handle. Premature entry promises losses.
Who knows how to wait - gets everything!
Good luck!
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