CupWatch Products

How To Trade the Cup With Handle Family of Trades

Just as the Cup with Handle Pattern is doomed in anything other than a bullish stock market the Inverted Cup with Handle will fail when the market is not bearish. The UpTransition Phase of the Cup with Handle Cycle holds some of the most predictable winners for traders that are in the know. If you have studied my material you know that the strategies we use in this phase come about because the Inverted Cup with Handle has failed. It other words it did not break down below the Pivot Point Trendline (a line extended form the Close of the bar making up the Right Side of the Cup) like a normal Inverted Cup with Handle will do in a Bear Market. Look at the Pivot Point Trendline as a powerful Support/Resistance line.

As of the writing of this blog post, NCR Corporation ($NCR) is in such a trade. After completing the Inverted Cup with Handle pattern it began to develop a normal handle. On March 13 it looked like it was going to make a strong break down below the Pivot Point Trendline. Because the stock market was still bullish it was met with strong support that caused it to repel off the trendline. This move is what I call the #IBounceOffLE strategy. The “I” is because it is associated with the Inverted Cup with Handle; the BounceOff is because it appears to bounce off the trendline; and the LE stands for Long Entry.  In other words it will enter a Long Position when conditions are met after it is applied to the chart.

When an Inverted Cup with Handle is formed with the overall stock market still in a bullish trend these trades tend to be short lived. This is what we have at present with $NCR. In the past two days it has gone down and may be getting in trouble. Rather than guess whether you should exit the trade or not, it is always prudent to let the strategy make the exit for you. If you haven’t already done so, I highly recommend you read all the articles we have posted on the website. When you have completed them you will be in a position to pick up on these great trades when they pop up. Study the chart below for $NCR, then watch it over the next several days and see what happens. If you have any questions please email me at  Good Trading.