CHFJPY BULLISH CUP AND HANDLE PATTERN

The Cup and Handle pattern was developed and popularized by William J. 0’Neil in the 1980s
through his CANSLIM methodology, Investors Business Daily newspaper and his book 'How to Make Money
in Stocks.'


Cup and Handle pattern resembles a Cup with a Handle. Cup and Handle patterns are continuation
patterns, and they usually form in bullish trends. Most Cup and Handle patterns are very reliable
and offer great trading opportunities. They also form in all markets and in all time-frames. The
“Cup” formation is developed as consolidation phase during price rallies from the round bottom
formation over multiple weeks to months. The “Handle” part forms due to a price correction
after“Cup"formation and before a clear breakout to the upside.


Cup and Handle pattern structure show the momentum pause after reaching a new high in a U-Shape
form, followed by another attempt to breakout. When this breakout from the rim of the cup fails it
starts to fall back to build the 'Handle' structure. Usually, the handle structures are small, and
the handle depth should not exceed more than 50% of cup depth. This handle part of the pattern
generates interest in buyers as they expect the pattern to breakout from these levels. The pattern
is valid only if price convincingly breaks out with increased volume above the rim of the cup
levels.

Key pattern characteristics

Trend: Prior trend before the formation of Cup & Handle pattern must be bullish

Cup Shape: The Cup formation should be 'U' shaped and not 'V' shaped.

Cup Depth: Cup should retrace at least 25% of cup depth but may not be more than 50% of cup depth.

Handle: Handle resembles a flag formation in a pullback fashion. Breadth (\\/idth) of Handle is
usually small, and it can be 25-40% of Cup's width.

Volume: Volume diminishes during the first half of the cup and increases during the right side rise
of the cup. Handle also exhibits a similar volume behaviour. Volume should see a significant surge
during breakout above the rim level.

Duration: Cup and Handle patterns must have extended breadth (2 to 12 weeks) to be a valid pattern.


How to Trade

Entry: Cup and Handle patterns present great bullish trading opportunities. When the pattern breaks
out above the rim of the cup, a 'long' trade is entered above the high of the breakout bar.

Stop: A stop should be placed below the middle of the handle level.

Targets: Targets are placed at 62-100% of the Height of the cup