Good day everyone,
I would like to take this time to share a little jewel i use within my trading from time to time. We will focus only on the start of the cup and handle formation, inverted also.
Load the TF you enjoy trading. I will use the 1h but it works on the 1m also.
Load
Period 8 , green, simple, close
Period 18, red, simple, close
Once you you have done that let us simply think about what a cup and handle formation means in words. The left side of the cup will represent the breakout… The breakout could be to the upside or downside. The bottom portion of the cup will represent the cat bounce or the slow accumulation we know as the market trading flat. Here is where most people enter their positions trying to catch the top or bottom. Finally, the right side of the cup will represent the 100% “correction” of The Last Move. Remember The Last move Being The Left Side Of The Cup.
With That Said. Let Us Look At Some Charts.
Let us look at the left side of the cup…
Now as we focus on this part notice one thing. We have a drop in price and we respect the selling as TOP part of the expected cup and handle will be the last candle to have closed above the top side of the red ma line. That would be the candle the arrow is pointing at.
The bottom of the cup is what will look at next…
Do you see the candle with the gray box under it and the red candle above it? Well that is your signal to now buy… Why? Well because the MA lines have crossed over thus confirming the bottom part of the Expected cup and handle formation.
Where is your sl? Your sl will be presented to you further along! Yet the sl will be the low of the move down…
Do you see the third arrow? Doesn’ t it move right up to the candle which we considered As The 100% Reversal.
So Clearly We Will Be Exiting Right Before The Handle Part Of The Move Is Formed.
Here is the same setup for EU but on the 1m… Doesn’t it look and work the same exact way?
Maybe some live trades will help?
