Cup & Handle Season: How to Spot an Invalid Cup&Handle BreakoutIt's Cup & Handle Season! There have been multiple cup and handles that have formed all around the altcoin market recently in what I am going to dub as cup and handle season. I'm out hunting for valid cup and handles and while most of them this time around seems like they will eventually be validated....it is easy to get faked out by these patterns and think the top of the cup and even the handle has already formed when in reality the cup is deeper than you originally thought and the handle has not yet occurred. I'm using Cardano as the main example here because it illustrates this fake out quite well. There ahave been a few more of these type of fakeouts around the altcoin market and I will also be posting snapshots of those as well. As you can see here, the inner cup and handle was not the valid cup and handle and where we thought it had broken the neckline a few things occurred at that point that signaled to us that it actually hadn't broken the neckline. First and foremost we didn't get a huge boost of bull volume that needs to accompany such a breakout in order for it to be valid. This volume boost should occur after 3 consecutive 4hr candle closes above the rims neckline. 2nd, we got nowhere near the top of the dotted projected price target line, and 3rd where we turned around and the price started falling back down there was a candle tip on the left side of the cup that we could connect a horizontal trendline to and form a new higher neckline of our cup making the cup deeper and the projected price target breakout higher. You always want to consider on the left side of your cup, when charting your cup and handle, whether or not there are any potential candle tips above where you are charting that could eventually be the real rimline of the cup, and keep those in mind if these kind of fake breakouts occur so you know exactly where to readjust your top trendline. Anytime you see these potential higher spots on the left side of the cup it's always wise to have a good temporary exit strategy because once you readjust the line to fit the higher candle tip on the left, you want to do it right around the time that the top of the cup has just finished forming, that way you know you can short and that some dipping in price will have to ensue in order for the handle to form, because since the new top of the cup has just been found the handle has actually not formed yet. The 2 best places to enter a position during the formation of the handle are 1. at the bottom of the handle which is usually going to be around about half the price of whatever the projected breakout price target will be, or 2. right after it breaks upward out of the handle and starts heading towards the neckline. When trying to guess where the bottom of the handle will be, keep in mind that valid cup and handle patterns handles do not dip further down than half the size of the cup, also let a few candles on the handle develop first to get an idea of the trajectory its following...once you have that take those trendlines to about half the cup and handles breakout price target is set at and odds are good you will be able to buy in very close to the bottom of the handle for optimal profits. Waiting till it breaks out of the handle is also a good strategy as well because, you don't have to spend as much time in the consolidation period as buying at the bottom of the handle which can leave you waiting quite awhile for the handles breakout to occur sometimes. The good thing about these fakeouts, is you can still make profit on them during the fakeout, and if you know what to look for you can then turn around and exit those positions until the bottom of the real handle and then continue to make profit on them. This fake out can happen multiple times on one cup as well. ..but if you know what to look for you'll be prepared & only make profits off both the fakeouts & the real breakout. Thanks for reading and good luck!
