The Cup with Handle is a bullish continuation pattern that marks a consolidation period followed by a breakout. It was developed by William O'Neil and introduced in his 1988 book, How to Make Money in Stocks. As its name implies, there are two parts to the pattern: the cup and the handle.
How to find Cup and handle stock picks?
The Basics: How To Analyze A Stock's Cup With Handle
- Basic Characteristics. The stock needs to show a 30% uptrend from any price point, but it must be before the base's construction.
- Must Be High Enough. The handle should form in the upper part of the entire pattern. ...
- Avoid Deep Bases. ...
- The Buy Point. ...
- Volume On The Breakout. ...
What is often one cup size with a handle?
The handle is the consolidation before breakout and can retrace up to 1/3 of the cup's advance, but usually not more. The cup can be spread out from 1 to 6 months, occasionally longer. Ideally, the handle will form and complete over 1-4 weeks.
How to trade the Cup and handle chart pattern?
Chart patterns occur when the price of an asset moves in a way that resembles a common shape, like a triangle, rectangle, head and shoulders, or—in this case—a cup and handle. These patterns are a visual way to trade. They provide a logical entry point, a stop-loss location for managing risk, and a price target for exiting a profitable ...
Which side of the cup is the handle?
Handle: After the high forms on the right side of the cup, there is a pullback that forms the handle. Sometimes this handle resembles a flag or pennant that slopes downward, other times it is just a short pullback. The handle represents the final consolidation/pullback before the big breakout and can retrace up to 1/3 of the cup's advance, but usually not more.
What happens after a cup and handle stock?
What Happens After a Cup and Handle Pattern?? If a cup and handle pattern is confirmed, it will be followed by a bullish price move upward. You can pick a price target based on the size of the cup, but it becomes much less clear what will happen after the initial breakout from the cup and handle pattern.
What is a handle stock?
A handle is the whole number part of a price quote, that is, the portion of the quote to the left of the decimal point. For example, if the price quote for the stock is $56.25, the handle is $56, eliminating the value of cents in the quote.
Is a cup and handle bearish?
A Cup and Handle is considered a bullish continuation pattern and is used to identify buying opportunities. Almost the exact opposite happens in the inverse Cup and Handle pattern, which occurs in a downtrend and is considered a bearish continuation pattern by those who like to go short on the market.
How do you confirm cup and handle?
0:253:22How to Use Cup and Handle Price Patterns - YouTubeYouTubeStart of suggested clipEnd of suggested clipSimple because it looks like a tea cup with a handle. The cup portion of the pattern starts to formMoreSimple because it looks like a tea cup with a handle. The cup portion of the pattern starts to form when an uptrending stock reaches resistance.
What is cup handle called?
ear. There is a proverb in English (and many other languages no doubt) that "little pitchers have big ears". Cup handle is what it's called. I recently dropped a cup and broke its handle. Calling it ear, you might be understood, but calling it handle there's no risk of being misunderstood.
Is cup and handle good?
A cup and handle is considered a bullish signal extending an uptrend, and it is used to spot opportunities to go long. Technical traders using this indicator should place a stop buy order slightly above the upper trendline of the handle part of the pattern.
When should I buy cup and handle?
The cup can be spread out from 1 to 6 months, occasionally longer. Ideally, the handle will form and complete over 1-4 weeks. The buy point occurs when the stock breaks out or moves upward through the old point of resistance (right side of the cup). This breakout should occur with increased volume.
What happens when a cup & handle fails?
When the market turns bullish, the inverted cup-with-handle trade will begin to fail. The first indication of this market shift occurs when a breakdown in price turns back up in a few days and crosses above the pivot point price line, causing a breakout to the topside.