Trading the cup and handle breakout ($ATOM) -18.02.22
Ideal trading setup
1. round bottom with a small retracement
2. Volume breakout
3. Consolidation
4. Volume expansion on break out
5. Breaking out of the consolidation
6.Volume expansion intact
7. Bullish channel
8. The breakout
9. EMA squeeze and support
10. Riding the wave.
Tip: You can add other tools like the MACD and the likes for better clarity.
Note: This is a common alt coin breakout pattern, so it goes without saying that most coins at the moment are developing into this formation, only chose ATOM cause it was in my watchlist.
Credits: EmperorBTC
Happy trading, due diligence is advised!
1. round bottom with a small retracement
- What you would want to see on a classic cup and handle(cnh) is a nice round bottom with followed by a slight retracement.
2. Volume breakout
- After the formation of the cnh, the market will try to make a run, temporarily breaking the horizontal resistance.
3. Consolidation
- Even though the price drops at some point in this area, we see it bounce back up before breaking out of the consolidation zone.
4. Volume expansion on break out
- There is a significant increase in volume upon breakout, another good sign.
5. Breaking out of the consolidation
- This time around, we see the market trying to make another run up, and is eventually pulled back.
6.Volume expansion intact
- Although the market is dropping, we see the volume is still increasing. It is in form of a bearish candle, however since the movement happens inside a bullish channel, we can conclude that the increase is therefore bullish.
7. Bullish channel
- The price drops creates a bullish channels a bullish channel. I can see 4 waves in already (a-d).
8. The breakout
- Expecting to break out of the channel and eventually above of the consolidation ceiling thereby flipping resistance into support.
- If a resistance is tested several times, it weakens and the price will break through.
9. EMA squeeze and support
- We're looking for a crossover in EMAs (13, 21 55) withe the 55 acting as an overall support and the 21EMA running under the 13EMA.
10. Riding the wave.
- There are various ways of taking profits and everyone has their own preferences. Given one doesn't know when to take profits, the ideal exit will be when the price touches the 55EMA again, chances are by that time the EMAs might be flipping from being support and would now act as the resistance.
Tip: You can add other tools like the MACD and the likes for better clarity.
Note: This is a common alt coin breakout pattern, so it goes without saying that most coins at the moment are developing into this formation, only chose ATOM cause it was in my watchlist.
Credits: EmperorBTC
Happy trading, due diligence is advised!
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