Cup and handle
In the domain of
The cup part of the pattern should be fairly shallow, with a rounded or flat "bottom" (not a V-shaped one), and ideally reach to the same price at the upper end of both sides. The drop of the handle part should retrace about 30% to 50% of the rise at the end of the cup. For stock prices, the pattern may span from a few weeks to a few years; but commonly the cup lasts from 1 to 6 months, while the handle should only last for 1 to 4 weeks.[3]
The "cup and handle" formation was defined by William O'Neil"[2][4]
Context and interpretation
A cup and handle formation is considered significant when it follows an increasing price trend, ideally one that is only a few months old. The older the increase trend, the less likely it is that the cup and handle will be an accurate indicator. The trade volume should decrease along with the price during the cup and should increase rapidly near the end of the handle when the price begins to rise.[3]
References
- ^ "Cup and Handle". Investopedia. Retrieved 28 June 2015.
- ^ ISBN 978-0071614139
- ^ a b Cup and handle at stockcharts.com Archived 2009-04-17 at the Wayback Machine
- ^ "Cup with Handle (Continuation)". stockcharts.com. Archived from the original on 2011-08-08.