The cup and handle pattern on the chart is a technical indicator for bullish movement. The chart looks like a cup with handle as shown in the picture below.
Other important points to remember in Cup and Handle pattern
- Cups with longer, more “U” shaped bottoms typically send out a greater signal. Avoid cups with sharp “V” shaped bottoms.
- Cup formation should not be so deep. Avoid the deep handles too as the handle should form in the upper half of the cup.
- During the cup formation, volume should decrease and should remain below average at the base of the cup.
Example of Cup and Handle pattern
Above chart is the monthly time frame of IDEA. We can clearly see the cup and handle pattern and the share price is likely to move northwards.
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