day traders aftermarket lounge 28th Jluy, page-13

Interestingly SMN's chart shows a prime example of a cup and handle formation, a chart pattern that a lot of members of HC do not entirely understand. Its different to a rounding bottom pattern which is often what posters mistake the pattern for.



C&H patterns
- consolidate a prior uptrend, and lead to its continuation
- involve a retracement of either 50% or 61% of the original up-move
- mantain a fairly horizontal level of resistance at the top of the 'cup'
- break out of a confined trading range at the completion of the consolidation (i.e. 'handle')

- they aren't a reversal pattern of a downtrend
- they aren't necessarily prevalent even if the chart has a U shape to it, more often than not the pattern is a rounding bottom, not a cup and handle

Hopefully that clears up a small misunderstood matter for some here!