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How To Trade the Cup With Handle Family of Trades

The more I trade the Inverted Cup with Handle the more amazing I find it to be. There are two very important things to watch when the pattern shows up in the CupWatch Report.

  1. If the pattern is formed at the Top of the Market the odds are very high the Price will break out Below the Pivot Point TrendLine (Close on the Bar that makes up the RightSide of the Inverted Cup). To properly trade this stock all one has to do is load the InvertedCWH Strategy into a TradeStation Chart for that stock. If you set the strategy to trade automatically your work for that trade is complete. Through Inputs you can set the strategy to trade up to four (6) trades which it will do automatically. The chart below shows a good example.


  2. If the Inverted Cup with Handle pattern is formed after a prolonged downtrend it is SHOUTING to you that the bottom has been reached or is very close to it. Knowing this fact can make you a rich trader. This will be the beginning of the Up Transition Phase and the strategies for that phase should be used to the bullish upturn. If the overall markets have been in a downtrend check the major indexes to get an idea where the market is. If the stock has already traded below the Pivot Point TrendLine you need to load the #ReversdInvCWHTradLE as it is almost certain the price will turn up and break out above the PPTL which will trigger the strategy. If it continues on down no harm is done. DO NOT SHORT the stock. If the price is in the handle and appears to continue on down load the #IBounceOffLE strategy as the price is likely to meet strong support at the PPTL and will repel or bounce off the PPTL and head higher. If the indexes have already started a move up then load the #IHandleLE Strategy the day after it is reported in the CupWatch Report. Once you do you will have only one more area of concern to overcome. That will be over trading. Click on the Education Tab on the www.cupwatch.com website and then click on the Money Management Tab to learn how to manage your trades.

 

Trades used in the UpTransition Phase of the Cup with Handle Cycle:

 

 

When the information I have written about in this blog and also in the next one became clear to me, it provided the final piece of what has become a 15 year puzzle. It answered many questions I previously had. When you go through these two blogs and use the simulator to make and study these trades, a light will come on and you will be forever one of the elite traders.