A cup and handle price pattern on bar charts is a technical indicator that resembles a cup and handle where the cup is in the shape of a “U” and the handle has a slight downward drift. The right-hand side of the pattern typically has low trading volume, and may be as short as seven weeks or as long as 65 weeks.
- To observe the Cup and Handle pattern look for a minimum of 3 tops.
- The stock to qualify as C&H should have a minimum of 3 months trading range
- C&H observed at a longer time frame, better the probability.
- Flatter the better (Tops should be near to each other)
- At or before the breakout volume confirmation increases the probability
- Don’t be obsessed with the targets of the cup or handle
- C&H formed near all time highs are best and have higher probability
- C&H formed against the trend, say primary trend is downward, then stick to your targets and move on.
- C&H formed near the all-time highs are reliable and one should ride the trend as long as higher highs and higher lows are being formed.
- I believe this is a very reliable pattern, one should use this for investment bets Nooresh showed this with examples like Bajaj Finance and Avanti Feeds