The stock markets have been volatile, but one base pattern seems to be picking up steam. The most successful base pattern, the cup-and-handle, is seeing a resurgence in breakouts. With this pattern, investors can anticipate upcoming trends for stocks of all types.
The cup-and-handle pattern was initially documented by William O’Neil in his 1988 book “How to Make Money in Stocks” and has remained a reliable guide for investors trying to identify potential buying opportunities. The pattern itself is an easy one to recognize: it looks like a cup with a handle on it.
The cup portion of the pattern is a bullish trend that occurs before the stock breaks out of the handle. As the price of the stock starts to climb, it forms a “cup” shape on the chart. This portion of the pattern can occur over a period of several days, weeks, or even months.
The “handle” part of the pattern occurs when the price of the stock reaches the top of the cup and then dips back down. This dip provides investors with an opportunity to buy the stock at a reduced price than when the uptrend began.
The breakout occurs when the price of the stock surpasses that of the handle. This is usually seen as a sign that the stock is ready to resume its uptrend. At this point, investors can expect to see the stock start to rise again.
To get an idea of how the cup-and-handle pattern works, here are two examples. The first example is from a pharmaceutical stock that had been trending downward until early May of 2020. At that point, the stock formed the cup portion of the pattern and the handle portion soon followed. When the stock surpassed the highest point of the handle in mid-May, the stock saw a significant spike in price.
The second example is from a technology stock which had been on the rise having formed a cup in early March of 2020. The handle came soon after and when the stock surged past the highest point of the handle the price reached a peak.
The cup-and-handle pattern is not foolproof and can be affected by a variety of different factors. However, when used correctly, the pattern can provide insight and guidance as to when the optimal buying and selling points may be. As the stock market continues to be volatile, investors should keep an eye out for the cup-and-handle pattern, as it may provide an opportunities to outpace the market and make profitable investments.
The stock markets have been volatile, but one base pattern seems to be picking up steam. The most successful base pattern, the cup-and-handle, is seeing a resurgence in breakouts. With this pattern, investors can anticipate upcoming trends for stocks of all types.
The cup-and-handle pattern was initially documented by William O’Neil in his 1988 book “How to Make Money in Stocks” and has remained a reliable guide for investors trying to identify potential buying opportunities. The pattern itself is an easy one to recognize: it looks like a cup with a handle on it.
The cup portion of the pattern is a bullish trend that occurs before the stock breaks out of the handle. As the price of the stock starts to climb, it forms a “cup” shape on the chart. This portion of the pattern can occur over a period of several days, weeks, or even months.
The “handle” part of the pattern occurs when the price of the stock reaches the top of the cup and then dips back down. This dip provides investors with an opportunity to buy the stock at a reduced price than when the uptrend began.
The breakout occurs when the price of the stock surpasses that of the handle. This is usually seen as a sign that the stock is ready to resume its uptrend. At this point, investors can expect to see the stock start to rise again.
To get an idea of how the cup-and-handle pattern works, here are two examples. The first example is from a pharmaceutical stock that had been trending downward until early May of 2020. At that point, the stock formed the cup portion of the pattern and the handle portion soon followed. When the stock surpassed the highest point of the handle in mid-May, the stock saw a significant spike in price.
The second example is from a technology stock which had been on the rise having formed a cup in early March of 2020. The handle came soon after and when the stock surged past the highest point of the handle the price reached a peak.
The cup-and-handle pattern is not foolproof and can be affected by a variety of different factors. However, when used correctly, the pattern can provide insight and guidance as to when the optimal buying and selling points may be. As the stock market continues to be volatile, investors should keep an eye out for the cup-and-handle pattern, as it may provide an opportunities to outpace the market and make profitable investments.
