Forgive me if I am getting little bit too excited,
but for those familiar with "Cup & Handle" handles understand this these can be a very bullish signal.
Am I seeing a cup & handle or saucer or saucer forming here on the IHL Daily chart?
Forgive me I am a bit of a three year old when it comes to drawing skills, maybe someone can do better?
What is a cup & Handle Pattern?
A cup and handle price pattern on a security's price chart is a technical indicator that resembles a cup with a handle, where the cup is in the shape of a "u" and the handle has a slight downward drift.
The cup and handle is considered a bullish signal, with the right-hand side of the pattern typically experiencing lower trading volume. The pattern's formation may be as short as seven weeks or as long as 65 weeks.
What Does A Cup And Handle Tell You?
American technician William J. O'Neil defined the cup and handle (C&H) pattern in his 1988 classic, "How to Make Money in Stocks," adding technical requirements through a series of articles published in Investor’s Business Daily, which he founded in 1984.1 2 O'Neil included time frame measurements for each component, as well as a detailed description of the rounded lows that give the pattern its unique tea cup appearance.
As a stock forming this pattern tests old highs, it is likely to incur selling pressure from investors who previously bought at those levels; selling pressure is likely to make price consolidate with a tendency toward a downtrend trend for a period of four days to four weeks, before advancing higher. A cup and handle is considered a bullish continuation pattern and is used to identify buying opportunities.It is worth considering the following when detecting cup and handle patterns:
Length: Generally, cups with longer and more "U" shaped bottoms provide a stronger signal. Avoid cups with a sharp "V" bottoms.
Depth: Ideally,
the cup should not be overly deep. Avoid handles that are overly deep also, as handles should form in the top half of the cup pattern.
Volume: Volume should decrease as prices decline and remain lower than average in the base of the bowl; it should then increase when the stock begins to make its move higher, back up to test the previous high.
A retest of previous resistance is not required to touch or come within several ticks of the old high; however, the further the top of the handle is away from the highs, the more significant the breakout needs to be.
Read more hereGLAH
