Cup and Handle Pattern:
-It is a continuation pattern.
-Discovered in 1988 by William O'Neil. I recommend his book How to Make Money in Stocks.
-You need a previous trend in order to have a continuation pattern.
-When the pattern trickles down the "handle" the volume will be slowly declining.
-Once it breaks the "handle," the volume needs to be very high.
-Remember that the "cup" of the pattern needs to be a "U" shape and not a "V" shape. A "V" shape is likely to be a Double Bottom or a Double Top.
-The "cup" is gradual, it is about a 1/3 retracement from the previous uptrend, and goes back down to re-calibrate itself.
-You want to enter or add to your position when it breaks the "handle."
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i have a big question about patterns in general. Do you use pattern in a daily chart or on a monthly chart? because there is maybe a cup and handle patterns in a day but in the month there is another one but bigger. When i look at a stock chart, I look at 1 month chart 1 day chart and 1 week chart. So where should I draw the cup and handle to see potential profit in the future?
Hi Sasha - Thanks for another helpful video. I've been encountering what I think are failed cup and handle patterns. The failure , from what I understand, is taking place when the price is increasing from the bottom/end of the handle, but then reversing before it can pass the cup's neckline...so no breakout. From what I've observed, the price plummets after this, slightly beyond the depth of the cup. Can you recommend any material that discusses failures and their warning signs?
The best thing I've found is Bulkowski's chart pattern encyclopedia and it's Cup and Handle "Focus on Failures" subsection. It only covers failures that happen after a small breakout, not failed handles and the aftermath. :)
Just a note - O'Neil did not discover the pattern, he just thoroughly researched and popularized it. First mention of CWH as far as I know dates back to 1963 William Jiler book on charts. I am sure the pattern was discovered long before that.
Thanks for the video! It would be great if you could show some real situations with these explinations. Maybe some that are perfect and some that are not perfect that you would still trade on. New to the game and real charts help out a lot! Subbed to your channel. Keep up the good work!
Why wouldn't you say it's a cup and handle? It has been trading at a low volume during its lowest points. It seems that all of the patterns with CLVS match up with those seen in a cup and handle pattern.
What if there's no prior uptrend, is it no longer a cup and handle pattern? AMRS 2016 (May - Oct). I'm thinking not, since you say the Cup and Handle pattern is a "continuation" pattern. So if it was major downtrending prior to this "cup" or bowl, what would you consider this pattern to be if anything, and how would you trade it?
Also, do you think it looks like a "V" or would you agree it's a "U" shape?
Thanks, great video.
+Sasha Evdakov (TradersFly) Hi, I've read O'Neal's book, worth it's weight in Benjamins.But, how do you tell the difference between a C&H vs a weak, non-undercutting double bottom?? The handle part of C&H looks like a weak 2nd part of the double bottom...Are double bottoms just more 'v' shaped? Thanks!
+Sasha Evdakov you are right like i have a new name basically for english and people easy to understand i have been learning candles and meanings 8 hours a night for 6 weeks just meanings i have came up with meanings as in this like any other tade things change the names i have people can relate to which means a easy understanding and easier to remember by the way i made 257 on xauusd today but butt i cant lap it up i lost 54 pound also on xauusd
Good video for beginners like me ,but sir it could be more valuable if u tell us about 1. TIME PERIODS of this total formation and 2. about VOLUME ,not only handle and breakout level but during whole formation...
One more question if any stock formed C & H formation during 2 years ... can i consider it a valid C & H formation??? thanks :)
actually i read Thomas N. Bulkowski's description about that Cup formation have to 7 - 65 weeks and its depth not more than 33% from the prior uptrend %..n handle should have to form at least 1 - 2 week...thats y i asked that question...any way u r doing great job sir...ur videos r very helpful for us... wonderful presentation ...keep it up ...thanks
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