How this works
The cup should resemble a bowl or rounding bottom. The perfect pattern would have equal highs on both sides of the cup, but this is not always the case.
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 breakout and can retrace up to 1/3 of the cup’s advance, but usually not more.
The cup can be spread out from 1 to 6 months, occasionally longer. Ideally, the handle will form and complete over 1-4 weeks.
The buy point occurs when the stock breaks out or moves upward through the old point of resistance (right side of the cup). This breakout should occur with increased .
The price target following the breakout can be estimated by measuring the distance from the right top of the cup to the bottom of the cup and adding that number to the buy point. This should be used only as a guideline.
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