As of 09/25/2023
Indus: 34,007 +43.04 +0.1%
Trans: 15,101 +113.50 +0.8%
Utils: 870 -1.67 -0.2%
Nasdaq: 13,271 +59.51 +0.5%
S&P 500: 4,337 +17.38 +0.4%
|
YTD
+2.6%
+12.8%
-10.1%
+26.8%
+13.0%
|
|
As of 09/25/2023
Indus: 34,007 +43.04 +0.1%
Trans: 15,101 +113.50 +0.8%
Utils: 870 -1.67 -0.2%
Nasdaq: 13,271 +59.51 +0.5%
S&P 500: 4,337 +17.38 +0.4%
|
YTD
+2.6%
+12.8%
-10.1%
+26.8%
+13.0%
| |
| ||
Statistics updated on 8/26/2020.
For more information on this pattern, read
Encyclopedia of Chart Patterns Second Edition,
pictured on the right, pages 149 to 163. That chapter gives a complete review of the chart pattern, compared to what is described below.
The above numbers are based on 913 perfect trades. See the glossary for definitions.
Characteristic | Discussion |
Price trend | Price rises into the start of the cup. |
Shape | A rounded turn that looks like a cup with a handle on the right. |
U-shaped cup | The cup should be U-shaped, not V-shaped. |
Handle | The cup must have a handle on the right. |
Cup duration | From 7 to 65 weeks |
Handle | 1 week minimum with no maximum, forming in the upper half of the cup. |
Cup | Cup rims should be near the same price level but be flexible. |
Consult the associated figure on the right.
Trading Tactic | Explanation | ![]() The Measure Rule
|
Measure rule | Measure the height from the right cup lip (A) to the lowest valley (B) then multiply by the above 'percentage meeting price target.' Add the result to the breakout price (A) to get a target. | |
Inner cup | Cups often form within cups (points 1 and 2), so trade the inner cup when price rises above the handle (the dashed green line at point 3). | |
Trendline | If possible, draw a down-sloping trendline along the handle peaks. A close above the trendline signals an early buy. I show this as the blue line extending down from point A on the chart to the right. | |
Buy | Buy when price closes above the right cup rim (point A, and the top horizontal red line). | |
Stop | The handle low (point C) is a good place to put a stop. Raise the stop as price rises. | |
Throwbacks | Throwbacks hurt performance. | |
Short handle | Stocks with handles shorter than the median 22 days show superior post breakout performance. |
The figure on the right shows an example of a cup with handle chart pattern. The rise leading to the cup with handle begins at C and reaches the left cup lip at point A. Since this is on the weekly scale, the price chart appears narrower than usual, but price rounds downward forming a cup with the right cup lip at B. The handle lasts a few weeks before price begins moving up. The next week, price rockets upward about seven points.
-- Thomas Bulkowski
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