trading tutorial helps trading in the commodity market and stock market

Entries and Exits - continued

Entering a trade on a cup and handle pattern

A cup and handle pattern looks like a saucer with a handle on the right side: a high of at least 30% drops 15% to 40% down before rising back towards the previous top. The time period is from seven weeks to a year but most are within three to six months. The handle is a drop on the right side that is shallow, no more than 15%, and must have low volume. The buy point is 10 cents above the high just before the handle began, and the breakout bar should have volume at least 40% higher than average.

Bar 'A'

This is the high that began the cup and handle pattern. It is more than 30% higher than the July low.

Bar 'B':

Here is the breakout bar following the handle. Note that the handle had lower volume than the preceding up bars.

Bar 'C':

Had you sold on this third of three straight down bars your profit would have been 18%.

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