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How To Trade the Cup With Handle Family of Trades

All professional traders know how to trade the Cup with Handle pattern. So much so that it has become the “diamond in the rough” they constantly watch for. It is only formed when the market has been in an uptrend for a period of time. The stock must stop and take a breather and during this consolidation the Cup with Handle formation is formed. Stocks are in a trend only 20% of the time which limits the number of Cup with Handle patterns.  Since most stocks are affected by the overall markets, many chart patterns will take on a similar look. At times there can be long periods without any quality Cup with Handle setups. This will cause the novice stock trader to become discouraged as they will try to force trades in low quality stocks in bad markets.  Many stock traders will completely give up on Cup with Handle trades and find themselves out of the game when they should be patient and watching for the next opportunity.

The past two weeks has brought about that opportunity with a good number of excellent Cup with Handle Breakouts. The following stocks have broken out in the past few days: YPG, DAN, HP, PHX, IDTI, MPWR, ATVI, NFX, UHC, SLXP, ESL, TOWR, GD, SMP, KOG, and ST.  This is why it is smart to be patient and wait for the stock market to work for you. The following are three good examples.

 

Activision Blizzard Inc (ATVI) brokeout on very strong volume. Notice how the Pivot Point Trendline acted as strong Resistance until the breakout. The more you work with the indicators that I have developed, such as the Cup with Handle Indicator and the Inverted Cup with Handle, the more you will realize the Pivot Point Trendline is a powerful Support/Resistance tool.

 

After breaking out and entering a long position, MPWR pulled back to the Pivot Point Trendline before it took off. This is not unusual but many novice traders will panic and exit their position only to find it takeoff for a large gain. The charts shown in this blog all depict how the CupTrade Strategies© will trade the Cup with Handle. These are from actual trades.

 

TOWR made an even bigger pull back after entering a long position. After the strategy has entered a position it is best to let it go ahead and either Stop you out or continue with the uptrend. To be successful you must give the stock breathing room and allow it time to perform. You can’t have winning trades all the time but you will be much better off allowing the software make the trades for you. The CupTrade Strategies© have proven they can outperform any other system trading the Cup with Handle Family.

 

You will find it very beneficial to study the material in the Articles Section on this website. My job is to educate you on all the different strategies we use.