Cup & Handle forming.
Updated
Cup & Handle pattern can occur in two forms:
Education: Continuation Pattern
The price is moving higher, declines forming the U-shape and handle, then breaks out of the handle to the upside signaling the continuation of the uptrend.
As with the reversal pattern, the handle should not decline more than 50% of the way down the cup. Draw trendlines along the highs and lows of the prices within the handle. Enter long when the price breaks above the upper handle trendline.
Place a stop loss below the low of the handle. This controls the risk on the trade in case the price moves lower again.
Price Target
Add the height of the cup to the breakout point on the handle. This provides an estimated target for the next advance.
As discussed in the cup and handle reversal section, uptrends can last for years. The target represents a target for the next rally, but that target could be exceeded as the long-term uptrend unfolds.
How to trade the current situation?
We have the 4h-Chart here with a thin green downtrend line and a blue cup & handle pattern. There is also a thick green line which should approx. determine the upper bound of the cup.
First of all, we must break through the downtrend line to confirm the current uptrend. if we close above that it is very likely (at least in my humble opinion) to build a cup & handle.
The handle should not decline more than 50% of the way down the cup. That means, if we decline around 50% we would quite precisely set up on the downtrend line to test and confirm the uptrend.
Please do not consider this as a command to buy/sell. It is just the way how the current market situation could play out. It is your own risk if you follow my instructions.
- Continuation Pattern as part of an uptrend <-- which occurs now.
- Reversak Pattern as part of a downtrend
Education: Continuation Pattern
The price is moving higher, declines forming the U-shape and handle, then breaks out of the handle to the upside signaling the continuation of the uptrend.
As with the reversal pattern, the handle should not decline more than 50% of the way down the cup. Draw trendlines along the highs and lows of the prices within the handle. Enter long when the price breaks above the upper handle trendline.
Place a stop loss below the low of the handle. This controls the risk on the trade in case the price moves lower again.
Price Target
Add the height of the cup to the breakout point on the handle. This provides an estimated target for the next advance.
As discussed in the cup and handle reversal section, uptrends can last for years. The target represents a target for the next rally, but that target could be exceeded as the long-term uptrend unfolds.
How to trade the current situation?
We have the 4h-Chart here with a thin green downtrend line and a blue cup & handle pattern. There is also a thick green line which should approx. determine the upper bound of the cup.
First of all, we must break through the downtrend line to confirm the current uptrend. if we close above that it is very likely (at least in my humble opinion) to build a cup & handle.
The handle should not decline more than 50% of the way down the cup. That means, if we decline around 50% we would quite precisely set up on the downtrend line to test and confirm the uptrend.
Please do not consider this as a command to buy/sell. It is just the way how the current market situation could play out. It is your own risk if you follow my instructions.
Note
The "uptrends can last for years"... commonly in stock market, not in crypto market :)In crypto market we may talk of weeks then...
Note
We currently bounced off the green trend line.Note
After a little fight on the trendline, we bounced off hard again...(i sligthly modified the downtrend line, so it does fit the last high as well)
Note
What to do now?The cup & handle pattern did not play out as assessed. I have to say here, that i have assessed it very tight, due to the large upward candles. i am pretty sure, that the cup will be wider due to the struggle on the downtrend line. an updated chart will be posted, of course.
There are two conditions for the cup & handle pattern:
The downtrend line has to be breached!
After it breached, we need a pullback to test the upper side of the downtrend channel.
otherwise the cup & handle can't play out in the end and we probably don't see a new rally.
i will add a long position if the handle is confirmed by a test of the upper side of the downtrend channel with the conditions portraied on the chart.
in case we drop to 10k we have to asses the chart again.
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