What is the Cup and Handle Pattern in Stocks

Rancakmedia.com – Do you already know what the cup and handle pattern is? These are some technical analysis that you might be good at. As the name implies, this diagram is a cup-shaped diagram that makes a U-shaped curve. And the cup pattern that connects to a U-shaped.

This cup pattern was created due to a brief price drop. In short, the development of a pattern can be observed in increments stock price and subsequently in certain price reductions. After dips, the stock in this pattern often increases fast enough to make a cup.

But what should investors do if this pattern forms from stocks? Is this a bullish symbol? Or vice versa, as a bearish sign? Check out the explanation below.

Get to Know What the Cup and Handle Pattern Is

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 lower right side resembling a cup handle. This pattern is often seen as a bullish signal indicating an upward price trend.

Pattern As Indication Of Bullish Cup and Handle

There is no need to worry about investors who already hold Stock A and this Stock forms 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 stock price will then rise again in line with the bullish trend that was formed before.

What is the Cup and Handle Pattern

For shareholders, this pattern is great news. Despite many corrective points, stocks are 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 Cup and Handle?

Even though these patterns should continue price trends, investors and traders still need to create investment methods in order 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 handle cup, which is marked by a fall in the stock price.

If a cup and handle pattern is formed, traders may buy at the starting point. Usually the stock will rise sharply after the lowest point of the handle is made. The increment is usually at least equal to the depth of the cup being made.

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

Take Profit Targets

The price of the handle will usually increase to the depth of the correction cup, for example, the depth of the correction is 100 points, and a reasonable target can be set to 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 values.

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

Conclusion

Cup and handle patterns are some of the technical analysis you may be good at. The development of a pattern can be observed in the increase in the price of a stock and then in a certain price decrease. After dips, the stock in this pattern often increases fast enough to make a cup.

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