Cup with handle

Cup with handle chart pattern is bullish type of pattern.

It is also considered as continuation pattern as it has biggest reliability when appears after some uptrend.

This chart pattern represents price consolidation. Breakout of resistance should start new uptrend move.

Typical design of this stock chart pattern you can find on this picture:

This chart pattern is quite similar to ascending triangles . You can use definition which is more familiar for you.

Another example on XLNX stock chart:

Trading rules

Trade should be entered after breakout of horizontal resistance level . Stop loss has to be set under this resistance level.

Target can defined by this methodology. Take distance between high and low of cup part of this pattern. The distance after breakout of resistance to the target level should be the same.

! My special stock chart pattern trading tip !

Include

moving averages

to your stock chart analysis if you see this chart pattern. Moving averages have to support price action from bottom side and push price up.

The shorter is distance between horizontal resistance price level and moving averages the better trading setup is found.

Breakouts could be very explosive when distance is really short. Price can go up quickly and can reach target much sooner.

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