The use and deployment of charts has increased with
the increase in popularity of technical analysts. The patterns formed in the
chart by the application of indicators and oscillators are called chartpatterns. The chart patterns are the signals representing the market trend and
the price of stock moving in one direction.
There are various types of formation in the charts,
like cup and handle pattern, head and shoulders pattern, double top and double
bottom and many others. There are two types of pattern types: reversal and
continuation. A reversal pattern indicates that previous trend will be reversed
as soon as the pattern completes. The continuation patterns indicate that
previous trend will keep on continuing in the same direction, even after the
pattern is completed.
One of the most popular patterns is cup and handle
pattern. The pattern formed is like a cup with a handle. This pattern shows
bullish continuation trend. Pattern shows the break of uptrend and it continues
to trade down, but the stock will continue in an upward direction after the
completion of the patterns. This pattern generally ranges from few months to
years.
There are few important facts involved in the
formation of the cup and handle pattern. First and foremost thing every
technical analyst must know is that before the formation of the cup and handle
pattern there is an upward trend. The more the previous trend lasts before the
pattern the lower will be the potential for larger breakout after the pattern
has been completed. The cup and handle pattern must be formed by proper semi
circle formation. The cup and handle formation shows the signal of strengthening
of position within a trend. In this scenario, the weak investor leaves the
market and sells its stocks and securities. However, the new buyer does not leave
the market, they hold on their position.
The technical analysts of Money Classic Research are
experts in studying the technical charts well and thus offer the best and
accurate advice to their customers.
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