The handle cup model is in the form of a continuation pattern, marking a period of consolidation, after the breakout, the trend continues as it was. Furthermore, it is also one of the important chart patterns that are always trusted by stock or Forex traders. To capture price booms and breakouts. So you should carefully learn what the cup pattern trading strategy is, as well as how to trade with this pattern at reputable Forex brokers. Because when you understand, you already have a powerful weapon in your hand to start trading in this forex market.
Construction of the cup handle model
The Cup and Handle Pattern consists of 2 parts, the cup has a U-shaped arc, usually formed over a period of 6 months. They are two cup mouths that may or may not be the same. The second is the handle part, the training time will be shorter, usually a few weeks. As follows:
Cup (Cup)
Formed after an uptrend, this period can be seen as the perfect start, representing a breakout to the upside once the handle is fully confirmed.
Initially, the market was in an uptrend, then it started to gradually decrease forming the body of the cup on the left. After a while, the price moves to the bottom of the cup and starts to rise to complete the right body of the cup.
For this pattern, when connecting 2 cups, we will get a resistance line. As mentioned above, the two vertices of the canopy are not necessarily the same, usually the left vertex will be lower. Therefore, the resistance line may be sloping slightly upwards.
View more: What is support and resistance? How to identify potential support and resistance zones
Handle (Handle)
Upon completion of the cup section, the market will have a slight pullback with depth. It should be noted that this depth should not be more than half the depth of the cup.
After an accumulation period of 1 to 4 weeks, the price is corrected to form a complete identifier. So if the price continues to rise to get out of the handle. So that's when the cup and handle model is confirmed.
Instructions on how to trade with the cup with handle pattern
The method of trading with the cup hand pattern is considered to be quite simple. Since you only need to determine when to enter the purchase order, 80%'s problem is resolved. Specifically, to enter a buy order, you can do it in 2 ways below:
Method 1: Type at the bottom of the handle, this is the most common way of trading with the cup and handle pattern. The ideal place to place a buy order in this case is a point one third of the height of the cup from the top of the cup.
Method 2: Enter the trade as soon as the price leaves the handling zone. At this time, the price will rise very strongly, so you may not need to set a take profit. This method is considered quite safe and gives a good profit for traders.
Then you place a stop loss at the bottom of the handle. However, such a stop loss, the risk will be better. Therefore, in the experience of long-term investors, you should place a stop loss at the closing price of the candle with the best volume.
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