rancakmedia.com – It is not halal only for stock market participants to understand basic analysis. Technical analysis also helps to identify resistance points so investors know when to enter or exit a stock. The cup and handle pattern is some of the technical analysis you might be good at.
As the name implies, this chart is a cup-shaped chart that creates a U-like curve. And a cup pattern that connects to a U-shaped one. This cup pattern is created because of a brief price drop.
In short, the development of a pattern can be observed in an increase in the price of a stock and subsequently in a decrease in a certain price. After a decline, stocks in this pattern often increase quickly enough to make a cup.
But what should investors do if this pattern is formed from stocks? Is this a bullish symbol? Or vice versa, as a bearish sign? Check out the explanation below.
Pattern As Indication Of Bullish Cup and Handle
There is no need to worry about investors who already hold Share A and this Share forms a cup-and-handle pattern because it is not an indication of a negative trend.
On the contrary, this pattern describes the trend continuation phenomenon. Where the stock price will then rise again in line with the previously formed bullish trend.
For shareholders, this pattern is great news. Despite many corrective points, the stock is on a bullish trend to maximize profit potential.
This pattern was originally identified in his book How to Make Money In Stock by William O’Neil.
What Technique Is Required To Make The Cup And Handle?
Although these patterns should continue the price trend, investors and traders still need to create investment methods in order to get the maximum return.
The first is to assess whether the resulting pattern is really a cup and handle pattern. The key is that traders have to wait for the handle or the handle cup, which is marked by a decline in stock prices.
If it is true that a cup and handle pattern is created, traders can buy at the starting point. Usually the stock will rise sharply after the lowest point of the handle is made. The rise is usually at least equal to the depth of the cup made.
In addition to understanding the moment of buying, traders need to understand when to take profits. Traders should not be greedy in this pattern. According to the formula, the increment usually corresponds to the correction depth of the cup. Traders should thus be prepared to set profit goals at this stage.
Target Take Profit
The handle price will usually increase to the correction depth of the cup, for example, the correction depth is 100 points, and a reasonable target can be set to be 100 points from the breakout handle. The cup and handle pattern is a pattern that is rarely seen, but this pattern is very accurate for forecasting stock values.
Traders are required to incorporate stock movement patterns, which in addition to money management, indicators etc, are integrated into their trading strategy. So the pattern in technical analysis such as the cup and handle pattern is one thing that needs to be considered.
Conclusion
The cup and handle pattern are some of the technical analysis you might be good at. The development of a pattern can be observed in the increase in the price of a stock and subsequently in the decline in certain prices. After a decline, stocks in this pattern often increase quickly enough to make a cup.
But what should investors do if this pattern is formed from stocks? Is this a bullish symbol?
Or vice versa, as a bearish sign? The cup and handle pattern is a pattern that is rarely seen, but this pattern is very accurate for forecasting stock values. Traders are required to incorporate stock movement patterns which in addition to money management, indicators etc, are integrated into their trading strategy.
In the case of the Japanese yen, traders need to be aware of the fact that it is impossible to predict when the yen will rise or fall from current levels.
