William J. O'Neil first described the model of a breakthrough "cup with handle" (Cup and Handle (C & H)) in his book, "How to make money in stocks." Since that time, Investors Business Daily and other popular magazines have broadened our understanding of this classic model. But to date, very few swing-traders are aware of the diversity of this formation on different time scales and markets.
Source pattern resembles a rounded cup with a tiny hand and represents a breakthrough triple peaks. Price rises to the first peak, razvorachivatsya and rolled to form the left side of the cup. Ultimately, the asset is the support and builds the bottom side. New Rise breaks to the old maximum. It forms the right side of the cup. On the double top sellers appear, and the market pulls back a second time. Next draw a smaller decrease in the handle, because the price will stabilize again, but this time at a higher level. Then it rises again in the 3 rd rise sharply and flies away to new highs.
Classic breakthrough cup with handle Idec Pharmaceuticals has drawn an excellent model of the C & H and the price and time. Formation of the cup is approximately 3 months, while the handle is drawn only 1 month. The handle is reduced to the level of classical retracement of 50% before the strong release through the top resistance in the dynamic rise of 100%.
FOREX FOREX
Take a look at the mechanics of the market. After the first peak prices sharply rolled back before the new lift. This forces the oscillators to turn around and encourage the bulls to exit positions. Swing traders are included in the new short selling when the price is close to a double top. This increases the pressure of sales and forcing the price back down again. Eventually it reaches the support, while the indicators rectified from oversold levels. Then the bulls feel a new opportunity and build the volume back to the old highs. This forms the bottom of the handle, which prevents further sales. Price reaches a maximum for the third time and breaks it.
The volume must support the price to a new upsurge was successful. Original O'Neyla approach requires that the amount of breakthrough increased by at least 50% above 50-day moving average volume to a new high. The classic definition also filter the behavior of directly within the cup. Rising days on the right side of the cup should show a higher volume than the falling day and 50-day VMA.
Such stringent requirements lead to the fact that swing traders misinterpreted by this model. Many predictable formations C & H will never perform these standard definitions. The handle can be deeply rollback or actually build a bottom on new highs above the cup. The volume can break all the rules and show excellent accumulation during the break. And deep pen can even try to penetrate at least the bottom of the cup before you begin the final ascent. Method of screening "third observation is looking for a classical model, but reduces by half measure. It defines the breakthroughs occurring within a 6-month highs instead of 52 weeks. Handle in screening encompasses many varieties of this complex formation. The only requirements are that the market did not give any new highs within 4 weeks before the signal. Third observation is also seeking the peak volume of at least 150% of the average for a bar break.
Crowded pen Immunex broke the 4-month resistance and 52-week high, because the FDA approved its key drug for treatment of arthritis. Pay attention to the November cluster directly below the first peak and a strong break.
FOREX FOREX
Use the strategy of the third observation to trade on breakouts of triple peaks. While the scan shows a certain type of C & H, the market draws this model many unique ways. And rising triangles, and rectangles based on the same mechanics prices. The resistance of the parallel price channel often crops up in 3-LEN maximum, since the momentum is increased candles. Sometimes the relative maxima are drawn at equal distance from each other, but not in proportion to the cups and pens. All these give strong signals swing traders valuable insights and profitable tactic for the game on breakouts.
Location handle provides an important link with accumulation. Volume tends to outstrip the price or keep up with it, especially at new highs and lows. When the pen is formed below the cup, this suggests that the accumulation must be built on before you pass through the gap. On the contrary, the concentration immediately above the two old peaks indicate a very strong market, which should dramatically go into the trend, as soon as a new platform. Do not miss the formation of a double handle. This strange model bottoms on both sides of the two old highs. When the cup with two handles (C & 2H) begin to take shape, measure the latest trends immediately below the first pen. Add it to the length of the base of the second handle to get the target price for the next upswing.
Focus on Deytreydinge Quick traders may find the formation of the third observation on the intraday charts, as well as daily and weekly. This important kind of classic cup with handle provides a welcome addition to the toolbox deytreydera.
FOREX FOREX
Third observation offers an excellent intraday transaction. This reliable model often appears in short-term schedules and gives a lot of quick profits. In addition to simple highs, looking first range of the first hour, which breaks down at the third attempt. Even the scalpers can maintain an effective strategy for surveillance. Define the intermediate peaks at 1-minute chart, and trade with rapid jerks, or breakthroughs in tick above this level.
Key intraday installation tend to reach a peak in the last hour. A strong trend often reaches the first climax in the early days, and spent several hours testing their new range. Bullish sentiment privodyatt price to daily maximum at the end of the day, if the market remains strong. This encourages new speculators who hope to continue the trend, or wishing to buy in anticipation of continuing the next morning. Sometimes the market closes, as soon as price reaches a peak, but no breaks. Then there is a high probability of strong Gap breakthrough.
Source pattern resembles a rounded cup with a tiny hand and represents a breakthrough triple peaks. Price rises to the first peak, razvorachivatsya and rolled to form the left side of the cup. Ultimately, the asset is the support and builds the bottom side. New Rise breaks to the old maximum. It forms the right side of the cup. On the double top sellers appear, and the market pulls back a second time. Next draw a smaller decrease in the handle, because the price will stabilize again, but this time at a higher level. Then it rises again in the 3 rd rise sharply and flies away to new highs.
Classic breakthrough cup with handle Idec Pharmaceuticals has drawn an excellent model of the C & H and the price and time. Formation of the cup is approximately 3 months, while the handle is drawn only 1 month. The handle is reduced to the level of classical retracement of 50% before the strong release through the top resistance in the dynamic rise of 100%.
FOREX FOREX
Take a look at the mechanics of the market. After the first peak prices sharply rolled back before the new lift. This forces the oscillators to turn around and encourage the bulls to exit positions. Swing traders are included in the new short selling when the price is close to a double top. This increases the pressure of sales and forcing the price back down again. Eventually it reaches the support, while the indicators rectified from oversold levels. Then the bulls feel a new opportunity and build the volume back to the old highs. This forms the bottom of the handle, which prevents further sales. Price reaches a maximum for the third time and breaks it.
The volume must support the price to a new upsurge was successful. Original O'Neyla approach requires that the amount of breakthrough increased by at least 50% above 50-day moving average volume to a new high. The classic definition also filter the behavior of directly within the cup. Rising days on the right side of the cup should show a higher volume than the falling day and 50-day VMA.
Such stringent requirements lead to the fact that swing traders misinterpreted by this model. Many predictable formations C & H will never perform these standard definitions. The handle can be deeply rollback or actually build a bottom on new highs above the cup. The volume can break all the rules and show excellent accumulation during the break. And deep pen can even try to penetrate at least the bottom of the cup before you begin the final ascent. Method of screening "third observation is looking for a classical model, but reduces by half measure. It defines the breakthroughs occurring within a 6-month highs instead of 52 weeks. Handle in screening encompasses many varieties of this complex formation. The only requirements are that the market did not give any new highs within 4 weeks before the signal. Third observation is also seeking the peak volume of at least 150% of the average for a bar break.
Crowded pen Immunex broke the 4-month resistance and 52-week high, because the FDA approved its key drug for treatment of arthritis. Pay attention to the November cluster directly below the first peak and a strong break.
FOREX FOREX
Use the strategy of the third observation to trade on breakouts of triple peaks. While the scan shows a certain type of C & H, the market draws this model many unique ways. And rising triangles, and rectangles based on the same mechanics prices. The resistance of the parallel price channel often crops up in 3-LEN maximum, since the momentum is increased candles. Sometimes the relative maxima are drawn at equal distance from each other, but not in proportion to the cups and pens. All these give strong signals swing traders valuable insights and profitable tactic for the game on breakouts.
Location handle provides an important link with accumulation. Volume tends to outstrip the price or keep up with it, especially at new highs and lows. When the pen is formed below the cup, this suggests that the accumulation must be built on before you pass through the gap. On the contrary, the concentration immediately above the two old peaks indicate a very strong market, which should dramatically go into the trend, as soon as a new platform. Do not miss the formation of a double handle. This strange model bottoms on both sides of the two old highs. When the cup with two handles (C & 2H) begin to take shape, measure the latest trends immediately below the first pen. Add it to the length of the base of the second handle to get the target price for the next upswing.
Focus on Deytreydinge Quick traders may find the formation of the third observation on the intraday charts, as well as daily and weekly. This important kind of classic cup with handle provides a welcome addition to the toolbox deytreydera.
FOREX FOREX
Third observation offers an excellent intraday transaction. This reliable model often appears in short-term schedules and gives a lot of quick profits. In addition to simple highs, looking first range of the first hour, which breaks down at the third attempt. Even the scalpers can maintain an effective strategy for surveillance. Define the intermediate peaks at 1-minute chart, and trade with rapid jerks, or breakthroughs in tick above this level.
Key intraday installation tend to reach a peak in the last hour. A strong trend often reaches the first climax in the early days, and spent several hours testing their new range. Bullish sentiment privodyatt price to daily maximum at the end of the day, if the market remains strong. This encourages new speculators who hope to continue the trend, or wishing to buy in anticipation of continuing the next morning. Sometimes the market closes, as soon as price reaches a peak, but no breaks. Then there is a high probability of strong Gap breakthrough.
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