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EURCAD CUP & HANDLE PATTERN The Cup and Handle chart pattern was developed and popularized by William J. O’Neil in the 1980s through his CANSLIM methodology, Investor’s Business Daily and his book “How to Make Money in Stocks.” The Cup and Handle pattern resembles a cup with a handle. Most of these patterns are very reliable and offer great trading opportunities. The “cup” formation is developed as a consolidation phase during price rallies from the round bottom formation over multiple weeks to months. The “handle” part forms due to a price correction after the cup formation and before a clear breakout to the upside. The cup and handle pattern structure show the momentum pause after reaching a new high in a U-Shaped form, followed by another attempt to breakout. When this breakout from the rim of the cup fails it starts to fall back to build the “handle” structure. Usually, the handle structures are small, and the handle depth should not exceed more than 50% of cup depth. This handle part of the pattern generates interest in buyers as they expect the pattern to breakout from these levels. Key pattern characteristics Cup shape: The cup formation should be “U- shaped” Cup depth: Cup should retrace at least 25% of cup depth but may not be more than 50% of cup depth. Handle: Handle resembles a flag formation in a pullback fashion. Breadth (width) of a handle is usually small, and it can be 25% to 40% of a cup’s width. Duration: Cup and handle patterns must have extended breadth (two to 12 weeks). How to trade Entry: Cup and handle patterns present great bullish trading opportunities. When the pattern breaks out above the rim of the cup, a “long” trade is entered above the high of the breakout bar. Stop: A stop should be placed below the middle of the handle level. Targets: Targets are placed at 62% and 127% of the height of the cup above breakout level.
Long
by TradeChartPatternsLikeThePros
6
V-BOTTOMTrading V-Patterns The recognition of patterns and its body of knowledge of how to react and what to expect helps a trader's success. Traders are always analysing 'Trends' and 'Reversals.' Their eternal question for traders is 'Can the trend continues?'. Knowing trends and trend reversals are critical for any trader’s success. Chart patterns classification of 'Continuous' or 'Reversal' patterns helps traders to identify specific patterns and expect their outcome from current price action. Traders move prices between key support and resistance areas (a tug of war) as their perception shifts between optimism and pessimism. This movement of price adhering to key support and resistance areas create chart patterns. Reversal patterns exhibit a total shift of trends from bullish to bearish or bearish to bullish in a single pattern structure. Examples of the reversal patterns are 'Head and Shoulders, Double Tops and Bottoms. A knowledge of reversal patterns helps traders to estimate the 'end of trends' to execute trades in a timely fashion for maximum gains. This knowledge also helps traders to time the trades in the opposite direction and to place smaller stop levels. Here I discuss one of the key reversal patterns ('V Chart Pattern') and present examples of how to trade them. Please note, all V patterns are classified as a bullish 'V-Bottom' and complimentary bearish patterns ('V-Top'). V Patterns As the name implies, the 'V' chart patterns have the letter 'V' shape and prices shift their momentum from an aggressive sell-off (Bearish) to aggressive rally (Bullish) in its structure. The 'V' pattern consists of rapid price action and may not be suited for all casual investors. The 'V' patterns are formed when its trend is sharply switched from bearish to bullish (in case of V-Bottom) or bullish (or sideways) to bearish (in case of V-Top patterns). Trading V-Patterns. EURUSD Chart it’s a mirror example of how a V-bottom structure looks like. How to Trade: Long Above the breakout Neck Line 1.07868 Stops: Below the low previous to the breakout 1.04819 Targets: 38% Depth 1.12545 62% Depth 1.15479 79% Depth 1.17569 100% Depth 1.20230
Long
by TradeChartPatternsLikeThePros
4