Cup & Handle Pattern (How To Trade)
Bullish Cup with handle chart pattern
A cup and handle Forex pattern is a bullish continuation pattern that resembles a cup with a handle, where the cup pattern is in the shape of a “U.”
The handle pattern has a slight downward drift.”U” shape looks like a cup and handle looks like a triangle. Might go down to Fib Ret 50% to 61.8% before price action does a confirming (Engulfing, Harami or Pin-bar candlestick setup) to trade to the bullish side.) Like any other pattern, a cup and handle Forex market pattern proves beneficial for trading as it gives a specific entry point, a stop loss, and a target price to exit and make a profit.
How To Trade: (Chart example of 4 hour EurAud)
1) Wait For Handle To Form or End.
2) Wait For Confirming Entry at Demand Zone/Support area
3) Can Be Engulfing, Harami Or Pin Bar Candle Set Up
4) 1.61000-Might Be Support Confirm On Handle Pullback
5) With Confirm Setup- Set Up A Buy Trade To Plan
6) 1st Trade Until Target #1. Per chart example: 40 pip stop loss vs 70 pip target. Either let trade run or take a partial % off of trade.
7) 2nd Trade Until Target #2. Per chart example: 40 pip stop loss vs 180 pip target. This trade will run for a few days this week.
The Psychology behind Cup and Handle Pattern
Each of the two key components, the cup and the handle, triggers specific crowd behavior. The cup component forms as a result of the buying power drying out. It doesn’t necessarily mean that sellers are stepping in either, or even if they do they lack the power to change the trend. The rounded bottom really shows the buyers are in control and thus new highs should be expected. The real trap comes from the handle component. This gradual and slow range is what will set the stage for the bullish trend to resume. People will think this is a double top which will trap some weak sellers when we finally break upwards.
Now, let’s see how you can effectively trade with the Cup and Handle trading strategy and how to make some profits.
A cup and handle Forex pattern is a bullish continuation pattern that resembles a cup with a handle, where the cup pattern is in the shape of a “U.”
The handle pattern has a slight downward drift.”U” shape looks like a cup and handle looks like a triangle. Might go down to Fib Ret 50% to 61.8% before price action does a confirming (Engulfing, Harami or Pin-bar candlestick setup) to trade to the bullish side.) Like any other pattern, a cup and handle Forex market pattern proves beneficial for trading as it gives a specific entry point, a stop loss, and a target price to exit and make a profit.
How To Trade: (Chart example of 4 hour EurAud)
1) Wait For Handle To Form or End.
2) Wait For Confirming Entry at Demand Zone/Support area
3) Can Be Engulfing, Harami Or Pin Bar Candle Set Up
4) 1.61000-Might Be Support Confirm On Handle Pullback
5) With Confirm Setup- Set Up A Buy Trade To Plan
6) 1st Trade Until Target #1. Per chart example: 40 pip stop loss vs 70 pip target. Either let trade run or take a partial % off of trade.
7) 2nd Trade Until Target #2. Per chart example: 40 pip stop loss vs 180 pip target. This trade will run for a few days this week.
The Psychology behind Cup and Handle Pattern
Each of the two key components, the cup and the handle, triggers specific crowd behavior. The cup component forms as a result of the buying power drying out. It doesn’t necessarily mean that sellers are stepping in either, or even if they do they lack the power to change the trend. The rounded bottom really shows the buyers are in control and thus new highs should be expected. The real trap comes from the handle component. This gradual and slow range is what will set the stage for the bullish trend to resume. People will think this is a double top which will trap some weak sellers when we finally break upwards.
Now, let’s see how you can effectively trade with the Cup and Handle trading strategy and how to make some profits.
Сделка закрыта: достигнута стоп-лосс цена:
Price action hit stop loss- no big deal. Just another trade of many. gl