The ARH cup and handle formation has been building for months, so in that sense it really doesn't relate time wise to today's announcement. But for the record, I saw the last bit go into the jigsaw about a week or so ago when the price touched 19 cents again. That was when I knew the formation was complete.
The cup and handle formation is one of the most reliable formations in technical analysis for predicting upward price movements. Basically, it consists of two "U" shaped parts, a big one on the left and a smaller one attached to it on the top right. So it kind of looks like a teacup and handle side on.
The formation is always horizontal across the top and has an upward sloping right hand side so it forms what is called an ascending triangle.
Some writers say it is valid only if it forms over a period of six weeks or less but my experience is that they can form over years and when they do they are just as reliable. Cooper Energy is a classic example of a formation that was years in the making. It broke out a while back at around 28 cents with a target of 40 and then went on to over 70 cents. Anyway, that's another story.
To calculate the target price for a cup and handle is easy. Having found the top of the formation (the horizontal line across the top) and the bottom of the formation (the lowest part of the cup), subtract the bottom price from the top price (in ARH's case 19 - 3 = 16) and add it to the top price (19 +16 = 35).
It is not uncommon for the share price to breakout, as it did today, and then retest support. That is why many traders don't jump onboard straight away. They wait for the second breakout which usually comes a few days later and is accompanied by strong volume.
Anyway, that's it in a nutshell.
ARH Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
