What is a 'Cup and Handle' ?
A cup and handle pattern on bar charts resembles its namesake, a cup with a handle. The cup is shaped as a "U" and the handle has a slight downward drift.
Place a stop buy order slightly above the upper trend line of the handle. Order execution only occurs if the price breaks the pattern’s resistance. Traders may experience excess slippage and entering a false breakout using an aggressive entry. Alternatively, wait for the price to close above the upper trend line of the handle, subsequently place a limit order slightly below the pattern’s breakout level, attempting to get an execution if the price retraces. There is a risk of missing the trade if the price continues to advance and does not pullback.
A cup and handle pattern on bar charts resembles its namesake, a cup with a handle. The cup is shaped as a "U" and the handle has a slight downward drift.
Place a stop buy order slightly above the upper trend line of the handle. Order execution only occurs if the price breaks the pattern’s resistance. Traders may experience excess slippage and entering a false breakout using an aggressive entry. Alternatively, wait for the price to close above the upper trend line of the handle, subsequently place a limit order slightly below the pattern’s breakout level, attempting to get an execution if the price retraces. There is a risk of missing the trade if the price continues to advance and does not pullback.