Forex charts: Cup with Handle

It is a type of continuation chart pattern which has appearance like cross section of tea cup with a small handle on the right side of the cup. The chart pattern has the typical duration of seven to sixty-five weeks handle duration must be at least one-two weeks and can exceed for long.

Explanation: The appearance of this chart pattern is quite pretty that s had a cup with handle formation and as soon as the interested traders apply the filtering procedures with the goal to achieve maximum targets and increase the ratio of success. As a consequence many of the implied correlation have a little statistical importance so utilize them with full care. To keep it simple, it is assumed that the chart pattern is having a uptrend formation but the conditions apply for the down trends as well inversely.

Conditions:

• U- Shaped cup not V-shaped with a handle because cups without handle are a different chart pattern.

• The cup with a handle must be preceded by a 30% rise or more that occurs very rarely in forex.

• It should be noted that the handle of the cup should not dip below the mid-point of cup, if such situation occurs, the pattern is considered to be invalidated

• The shorter the handle of the cup chart pattern with respect to the time it has the tendency to produce higher gains, the sample size is too diminutive to authenticate the consequences statistically

• The cup pattern forex charts having higher right lips executes more accurately as compared to the higher lips or equal lip heights and gives significant outcome

• The most probable outcome is approximately 15% after a breakout

• The duration required for the complete formation of the cup-handle chart pattern and touch the exact heights is around 6 months

• Keeping aside all these there are certain throwbacks or false breakouts that mislead the trading patterns before actual price action touches the target and are very common, false breakouts completes in approximate time of two-weeks and do not take more than thirty days.

Strong Points: It can be a high possibility trading if all the mentioned criteria are put into application correctly particularly to the lip heights as that it is the most statistically sound criteria. The possibility of false breakouts is so high that it can be used to fetch advantage.

Weak Points: A well set up cup with handle pattern is hard to find at Forex trading platform, as the necessities are fairly rigid. The standard expansion following breakout is quite small, implying reward-risk ratios need to be closely analyzed before actually starting trading on the basis of the forex chart patterns.

This is the sum up of information related to the forex trading that gives information to utilize these chart patterns in making position at the market.

About the Author

Article Written By: Linda Green

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