Appearance Price follows the shape of an inverted cup followed by a handle. Price breaks out downward.
Upward price trend Just over half the time, the pattern forms as a price top, meaning that prices enter and exit the pattern from the bottom.
Rounded cup Look for a smooth, rounded cup, but accept deviations.
Cup rims The starting and ending points of the cup should stop near the same
price, usually less than 6% difference.
Cup handle Between the right cup rim and the breakout is the handle. It can be
any length. The median is 40 days long.
Cup retrace Price in the handle must not climb above the top of the pattern but
should bounce upward. The three most frequent retrace amounts
are, in order, 42%, 35%, and 60%.
Breakout Price must close below the right cup rim before the pattern is valid.
Cup with Handle Inverted and free forex trading signals
Measure rule Compute the handle height then subtract it from the price of the
right rim low. Warning: This only works about half the time
Head-and- shoulders Look to the left of the cup to see if another handle appears. If so, this might be a head-and-shoulders top with a fat head and two
handles as shoulders.
Open short When price closes below the right rim low, short fx signals .
Close short If prices decline quickly, several points in a few days (almost
vertical), consider closing the short position. Prices usually rebound after such quick declines.
Draw a trend line down from the handle. When price closes above the trend line, cover your short.
Measured move down
The handle may be the corrective phase of a measured move down (MMD). Sell when prices near the amount of the first leg decline.