Free Trial

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player



Understanding Chart Patterns
Dan's 10 Golden Rules
Charting Programs
Recommended Reading
Useful Stock Resources
Glossary
11 Most Common Stock Chart Patterns
1.
Cup & Handle
2.
Flat Base
3.
Ascending Triangle
4.
Parabolic Curve
5.
Wedge Formation
6.
Channel Formation
7.
Symmetrical Triangle
8.
Descending Triangle
9.
Flags & Pennants
10.
Head & Shoulders
11.
Inverted Head & Shoulders

The Cup & Handle Pattern

The Cup & Handle is the corrective action after a powerful stock advance. Generally a stock will have a powerful move of some 2 to 4 months, then go through a market correction. The stock will sell off into the correction in a downward fashion for maybe 20 to 35 percent off the old high point. The time factor is generally anywhere from 8 to 12 weeks depending on the overall market condition.

As the stock comes up to test the old highs, the stock will incur selling pressure by the people who bought at or near the old high. This selling pressure will make the stock price drift in a sideways fashion with a bias to the downside for about 4 days to 3 weeks.

The handle is generally about 5% below the old high point. A handle that is any lower is generally a defective stock and contains higher risk for failure.

The time to buy the stock, is as it emerges into new highs at the top of the handle and not the old high point set some 8 to 12 weeks ago.

I have found some of the biggest stock market winners have this very powerful formation. It is one of the best and most reliable formations to look for. However, it is important to note that the best stocks with this formation are found at the beginning of a market move after a good market correction, and not during, or at the end of a major market advance.

 

HERE IS A SAMPLE CHART WITH A CUP AND HANDLE FORMATION

 


Copyright © 1998 - 2014 Daniel J. Zanger, all rights reserved
Do not duplicate or redistribute in any form.

Trademarks:

DAN ZANGER™
THE ZANGER REPORT™
CHARTPATTERN™

 

 


 

CHARTPATTERN.COM™ - Technical stock analyst and World Record Holder Dan Zanger™ shares profitable strategies for trading the stock market in the The Zanger Report™. The Zanger Report™ is a nightly newsletter that features breakouts, swing trading, breakout trading, technical stock chart analysis, stock tips, market research, hot stocks, and commented charts with highlighted chartpatterns. Dan Zanger™ shares additional real time strategy plays daily in his large chatrooms and archived daily comments.