"Cup with handle" is a continuing bull model, which marks a period of consolidation, followed by the breakthrough. It was developed by William O'Neill and presented in his book "How to make money on promotions in 1988.
In keeping with its name, there are two models: a cup and handle. A cup is formed after the increase and resembles a ball or rounded base. When the cup is formed, trading range develops on the right side and a pen. The subsequent break from the trading range handles signals the continuation of the previous bovine trend.
1. Trend: To qualify the model as a model to continue, there must be a prior trend. Ideally, the trend should be long enough but not too mature. The more mature the trend, the less likely that the model is the continuing or less potential for further upward movement.
2. Chashka: A cup should be U-shaped and resemble a ball or rounded base. V-shaped base is considered too severe to qualify as a turnaround. A more mild form of "U" guarantees that the cup is a model of consolidation with a good support at the base of "U". The perfect model would have an equal maxima on both sides of the cup, but this is not always the case.
3. Depth of cup: Ideally, the depth of the cup to restore 1 / 3 or less of the previous raise. However, in the context of volatile markets and excessive correction, recovery may be from 1 / 3 to 1 / 2 of the previous raise. In emergency situations, the maximum recovery could reach 2 / 3, which corresponds to Dow Theory.
4. Handle: After the formation of a maximum on the right side of the cup, there is No, which forms the handle. Sometimes it resembles a pen or a pennant flag, which is tilted down, in other cases, only a short setback. The handle represents the final consolidation / roll back before the big breakthrough, and can recover up to 1 / 3 cup of improving, but usually not more. The smaller the recovery, the more bull is a model and a more significant will be a breakthrough. Sometimes prudent to await the break above the resistance, set maximum cup.
5. Duration: Cup full-time schedules may extend up to 6 months depending on market-based instruments. The formation of the handle, in this case, can last from 1 to several weeks and ideally ends within 1-4 weeks.
6. Size: Should be a substantial increase in the break above the resistance handles.
7. Objective: Projected increase after the break can be estimated by measuring the distance from the right peak of the cup to its base.
As with most graphical models, is more important to capture the essence of the model than the details of it. Cup - it has the form of consolidation of the ball, and a pen - a short roll, accompanied by a breakthrough in increasing volume. Restoration of a cup of 62% can not meet the requirements of the model, but models of some market-based instruments can and in this case to capture the essence of the model "cup with handle.
Sample
. Trend: EMC has established bullish trend, increasing from 10 to above 30 in about 5 months. Market-based instruments has reached a maximum in March and then began to retreat and consolidate.
. Cup: The April decline was fairly sharp, but the minima in the period extended to two months to form a ball, who noted a period of consolidation. Also note that support for the formation of a minimum of 99g of February.
. Depth of cup: Min cup restored 42% of the previous raise. After months of June and July, the action has reached a maximum at around 32.69, to finish the formation of the cup (red arrow).
. Handle: Another period of consolidation began in July, forming the handle. It was a sharp decline in August, which prompted a pen to restore more than 1 / 3 cup improve. However, recovery was rapid, and the price quickly rose in the week within the normal limits of the handle. We will consider that the essence of the model remained valid after this sharp decline.
. Duration: Formation of a cup lasted for approximately 3 months, and the pens for about 1 1 / 2 months.
. Volume: In early September 2000. price broke the resistance handles to GEPom and increased (green arrow). In addition, Cash flow Chaikin soared above 20%.
. Objective: Projected increase after the break was evaluated at 9 points from the point of breakthrough, ie, at around 32. EMC easily comply with this objective in the next few months.
In keeping with its name, there are two models: a cup and handle. A cup is formed after the increase and resembles a ball or rounded base. When the cup is formed, trading range develops on the right side and a pen. The subsequent break from the trading range handles signals the continuation of the previous bovine trend.
1. Trend: To qualify the model as a model to continue, there must be a prior trend. Ideally, the trend should be long enough but not too mature. The more mature the trend, the less likely that the model is the continuing or less potential for further upward movement.2. Chashka: A cup should be U-shaped and resemble a ball or rounded base. V-shaped base is considered too severe to qualify as a turnaround. A more mild form of "U" guarantees that the cup is a model of consolidation with a good support at the base of "U". The perfect model would have an equal maxima on both sides of the cup, but this is not always the case.
3. Depth of cup: Ideally, the depth of the cup to restore 1 / 3 or less of the previous raise. However, in the context of volatile markets and excessive correction, recovery may be from 1 / 3 to 1 / 2 of the previous raise. In emergency situations, the maximum recovery could reach 2 / 3, which corresponds to Dow Theory.
4. Handle: After the formation of a maximum on the right side of the cup, there is No, which forms the handle. Sometimes it resembles a pen or a pennant flag, which is tilted down, in other cases, only a short setback. The handle represents the final consolidation / roll back before the big breakthrough, and can recover up to 1 / 3 cup of improving, but usually not more. The smaller the recovery, the more bull is a model and a more significant will be a breakthrough. Sometimes prudent to await the break above the resistance, set maximum cup.
5. Duration: Cup full-time schedules may extend up to 6 months depending on market-based instruments. The formation of the handle, in this case, can last from 1 to several weeks and ideally ends within 1-4 weeks.
6. Size: Should be a substantial increase in the break above the resistance handles.
7. Objective: Projected increase after the break can be estimated by measuring the distance from the right peak of the cup to its base.
As with most graphical models, is more important to capture the essence of the model than the details of it. Cup - it has the form of consolidation of the ball, and a pen - a short roll, accompanied by a breakthrough in increasing volume. Restoration of a cup of 62% can not meet the requirements of the model, but models of some market-based instruments can and in this case to capture the essence of the model "cup with handle.
Sample. Trend: EMC has established bullish trend, increasing from 10 to above 30 in about 5 months. Market-based instruments has reached a maximum in March and then began to retreat and consolidate.
. Cup: The April decline was fairly sharp, but the minima in the period extended to two months to form a ball, who noted a period of consolidation. Also note that support for the formation of a minimum of 99g of February.
. Depth of cup: Min cup restored 42% of the previous raise. After months of June and July, the action has reached a maximum at around 32.69, to finish the formation of the cup (red arrow).
. Handle: Another period of consolidation began in July, forming the handle. It was a sharp decline in August, which prompted a pen to restore more than 1 / 3 cup improve. However, recovery was rapid, and the price quickly rose in the week within the normal limits of the handle. We will consider that the essence of the model remained valid after this sharp decline.
. Duration: Formation of a cup lasted for approximately 3 months, and the pens for about 1 1 / 2 months.
. Volume: In early September 2000. price broke the resistance handles to GEPom and increased (green arrow). In addition, Cash flow Chaikin soared above 20%.
. Objective: Projected increase after the break was evaluated at 9 points from the point of breakthrough, ie, at around 32. EMC easily comply with this objective in the next few months.
Forex Magazine
based on www.stockcharts.com
based on www.stockcharts.com
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