FX:CHFJPY Swiss Franc / Japanese Yen
A is a continuation chart pattern that marks a consolidation period followed by a breakout.
Chart patterns form when the price of an asset moves in a way that resembles a common shape, like a , flag, , , or, like in this example, a .
There are two parts to this chart pattern:
The cup forms after a downtrend and is followed by an uptrend and looks like a bowl or rounding bottom.
As the cup is completed, the price trades sideways, and a trading range is established on the right-hand side and the handle is formed.
A breakout from the handle’s trading range signals a continuation of the previous uptrend.
The cup should resemble a bowl or rounding bottom.
The perfect pattern would have equal highs on both sides of the cup, but in the real world, just like when finding someone to marry, perfect doesn’t exist.
After the high forms on the right side of the cup, there is a pullback that forms the handle.
The handle is the consolidation before the breakout.
The handle needs to be smaller than the cup. The handle should not drop into the lower half of the cup, and ideally, it should stay in the upper third.
If the pattern completes successfully, the price should break above the trend established by the “handle” and go on to reach new highs.
The buy point occurs when the asset breaks out or moves upward through the old point of resistance (right side of the cup).
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