What is an Inverted Cup with Handle ?
The Inverted Cup with Handle
is formed as a stock in a downtrend enters into a period of consolidation.
The most prominent formations will be during a Bear Market. Just as
the Cup with Handle works best in a strong Bull Market the Inverted
Cup with Handle works best in a strong Bear Market. That doesn’t
mean we can’t make money on them in a weak market or one that
is moving sideways.
The Inverted Cup with Handle
is a mirror image of the Cup with Handle formation. The Leftside is
formed when a stock makes a bottom and starts back up the chart. The
Leftside will be the bar with the Lowest Close. As the price climbs
and begans to move sideways it forms the Base of the Cup and then descends
to form the Rightside of the Cup. The Pivot Point will be the Close
of the bar making up the Rightside. The price will climb up as the Handle
is formed. The length of the Handle and how far it climbs will, like
the Cup with Handle, depend on such factors as the type of market we
are in and the strength of investors in the particular stock. When the
price decends and Closes below the Pivot Point on better than average
volume we have a break out to the downside.
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