What is the Cup and Handle Pattern in Stocks

Lovata Andrean

Learn the Cup and Handle Pattern in Stocks
Learn the Cup and Handle Pattern in Stocks

Rancakmedia.com – Do you know what the cup and handle pattern is? This is some technical analysis that you might master. As the name suggests, this diagram is a cup-shaped diagram that creates a U-like curve. And the cup pattern that connects to the U-shaped.

This cup pattern is created due to a short price drop. In short, the development of a pattern can be observed in the rise stock price and then in a certain price reduction. After a decline, the stock in this pattern often rises quickly enough to make a cup.

But what should investors do if this pattern is formed in stocks? Is this a bullish symbol? Or vice versa, as a bearish sign? Read the explanation below.

Get to know what cup and handle patterns are

The cup and handle pattern is a pattern commonly used by traders to predict the direction of crypto price movements. As reported by Pintu Academy, the Cup and Handle Pattern is a price chart pattern that resembles a "U" shaped cup with a diagonal trend to the bottom right side resembling a cup handle. This pattern is often seen as a bullish signal indicating an upward price trend.

Pattern as an Indication of Bullish Cup and Handle

There is no need to worry about investors who already hold A Shares and these Shares form a cup-and-handle pattern because it is not an indication of a negative trend.

On the contrary, this pattern describes the phenomenon of trend continuation. Where the share price will then rise again in line with the bullish trend that has been formed previously.

What is the Cup and Handle Pattern

For shareholders, this pattern is good news. Despite many corrective points, the stock is on a bullish trend to maximize profit potential. This pattern was originally identified in his book How to Make Money In Stock by William O'Neil.

What Techniques Are Required to Make a Cup and Handle?

Even though this pattern should continue the price trend, investors and traders still need to create investment methods to get maximum returns.

The first is to assess whether the resulting pattern is truly a cup and handle pattern. The key is that traders must wait for the handle or cup handle, which is indicated by a fall in the stock price.

If a cup and handle pattern is created correctly, traders can buy at the starting point. Usually the stock will rise sharply after the bottom of the handle is made. The rise is usually at least equal to the depth of the cup created.

In addition to understanding the moment of purchase, traders need to understand when to take profit. Traders should not be greedy in this pattern. According to the formula, the increase usually corresponds to the depth of the cup correction. Traders should thus be ready to set profit goals at this stage.

Target Take Profit

The handle price will usually increase to the depth of the cup correction, for example, the depth of the correction is 100 points, and a reasonable target can be determined to be 100 points from the handle breakout. The cup and handle pattern is a pattern that is rarely seen, but this pattern is very accurate for predicting stock value.

Traders are required to include stock movement patterns, which in addition to money management, indicators etc., are integrated in their trading strategy. So patterns in technical analysis such as the cup and handle pattern are one of the things that need to be paid attention to.

Conclusion

Cup and handle patterns are some technical analysis that you may master. The development of a pattern can be observed in the increase in the price of a share and then in the decrease in a certain price. After a decline, the stock in this pattern often rises quickly enough to make a cup.

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Lovata Andrean

Hi, I'm Lovata, I'm not Ai but I am a content writer for SEO, Technology, Finance, Travel, Cooking Recipes and others. I hope this can be useful for all my friends. Thanks