Archive for the ‘Improve Your Market Timing’ Category

• The Cup & Handle is a bullish continuation pattern that starts with the stock pulling back after a bullish trend and forming a rounded bottom that resembles a cup.  It then ascends to form the backside of the cup and consolidates into a flag or handle.  The handle should ideally form at the level of the beginning of the downtrend on the front side of the cup but it is still a valid pattern even if the back lip of handle of the cup forms lower than the front lip.
• The entry point is the high of the handle and the upside potential is usually measured by the depth of the cup added to the breakout point.
• After pulling back and trading in a relatively tight pattern and forming a rounded bottom and then ascending to the consolidation handle, profit taking begins to appear as the stock flattens on deceasing volume.
• The continuation of the bullish move occurs when the stock breaks above the high of the handle with increasing volume.
• An astute trader will realize that the bearishness is temporary and the breakout represents the investment communities’ continuing participation in the longer term upside move.

Bookmark It

Hide Sites

• This Pattern is the inverse of the Ascending Triangle and is a bearish continuation pattern.

• The stock has formed consistent support as evidenced by several touches on the lower and basically horizontal trend line as the upper trend line posts consistently lower highs.

• The selling pressure is evident as the trend lines converge and the breakdown point is the breach of the lower horizontal trend line on increasing volume.

• The stock has repeatedly challenged the lower horizontal trend line which acts as support but has not breached the level.

• Selling pressure is present as evidenced by the lower highs and are depicted by the converging upper trend line.

• Eventually, the stock will usually break through the support n increasing volume and will continue its downside move.

Bookmark It

Hide Sites

• The Ascending Triangle is a bullish continuation pattern and is comprised of an upper trend line that is horizontal which acts as resistance and a lower trend line connecting higher lows and converging towards the upper trend line.
• The pattern is found in a bullish market and is generally considered a continuation pattern although it can sometimes reverse the market.
• The breakout point is above the horizontal upper trend line and the target move after the breakout is the widest part of the triangle added to the breakout point.
• The stock begins to stagnate to the upside with wider range trading.  The upside trend line remains as strong resistance as the stock begins to put in higher lows.  The investment community is telling us that there is a diminishing desire to take the stock lower and the presence of a converging lower trend line bodes for an upside breakout above the upper trend line.
• The buying pressure is evident as the stock puts in higher lows while stubbornly holding steady at the high of the range.
• Eventually, the stock will break through and past the resistance to establish new highs on increased volume.

Bookmark It

Hide Sites

• The inverse of a Cup & Handle Chart Pattern.
• The stock bounces off of a support level and moves higher on unremarkable volume.
• A “Rounded Top” forms and then subsequently moves lower on increasing volume producing “The Cup”.
• The pattern is completed when a Bear Flag forms producing the handle.
• The breakdown occurs when the stock breaks the low of the handle on increasing volume.

Bookmark It

Hide Sites