The Cup is usually U-shape and the handle is basically the retracement from the prior top to about 1/3rd of the vertical height of the cup and looks quite similar to a bowl. This pattern simply shows a period of consolidation followed by a breakout.
Cup and Handle patterns can be seen both as bullish continuation or reversal patterns.
A continuation pattern is...
Buy when the price breaks above the top of the triangle. When the price moves out of the handle, the pattern is considered complete, and the price is expected to rise.
While the price is expected to rise, that doesn't mean it will. The price could rise a little and then fall, it could move sideways, or it could fall right after entry. For this reason, a...
Trading an Inverse Head and Shoulders Conservatively
An investor can wait for the price to close above the neckline; this is effectively waiting for confirmation that the breakout is valid. Using this strategy, an investor can enter on the first close above the neckline. Alternatively, a limit order can be placed at or just below the broken neckline, attempting to...
Buy when the price breaks above the top of the channel or triangle. When the price moves out of the handle, the pattern is considered complete, and the price is expected to rise.
While the price is expected to rise, that doesn't mean it will. The price could rise a little and then fall, it could move sideways, or it could fall right after entry. For this reason,...
With this formation, we would place a long entry order above the neckline.
Our target is calculated just like the head and shoulders pattern.
Measure the distance between the head and the neckline, and that is approximately the distance that the price will move after it breaks the neckline.
A wedge is a price pattern marked by converging trend lines on a price chart. The two trend lines are drawn to connect the respective highs and lows of a price series over the course of 10 to 50 periods. The lines show that the highs and the lows are either rising or falling and differing rates, giving the appearance of a wedge as the lines approach a convergence....
Bullish Pennants are continuation candlestick patterns that occur in strong uptrends. The Pennant is formed from an upward flagpole, a consolidation period and then the continuation of the uptrend after a breakout. Traders look for a break above the Pennant to take advantage of the renewed bullish momentum.
Confirmation: Traders can look to the volume indicator to see higher volume (greater conviction) in the move up. Additionally, divergence can be observed as the market is making lower lows but the rsi indicator is making higher lows – this indicates a potential reversal.
As we get tighter and tighter that’s what we’re focused on as the buildup in pressure will eventually lead to a breakout. In order to avoid possible false breakouts, we’re also going to wait for a close above the upper slope before we actually buy.
In the head and shoulders pattern, we are waiting for price action to move lower than the neckline after the peak of the right shoulder. For the inverse head and shoulders, we wait for price movement above the neckline after the right shoulder is formed.