Basic Pattern: explanation of Cup and Handle pattern.

How to trade Cup and Handle pattern?

The Cup and the handle pattern is basically the retracement from the prior top to about 1/3rd of the vertical height of the cup.

Cup and Handle pattern can be seen both as a bullish continuation or reversal pattern.

Cup
The Cup is usually “U” shaped and may be considered as a rounding bottom with almost equal highs on the both side.

Handle
The handle is usually the pullback and the pullback is about 1/3rd of the size of prior advance.
The smaller the pullback, better is the strength of the formation and higher the possibility of breakout.

Volume
The breakout from the handle’s resistance should be appear with increased volume therefor conforming the breakout.

Target
The projected target from the breakout is usually the vertical distance from the high to the bottom of the cup.

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