Forex Chart Formation Patterns_11. Learn Forex Cup and Handle Formation Pattern

Lesson 11: Learn Forex Cup and Handle Formation
Pattern

A bullish continuation pattern can be observed in the cup and handle method. It
takes its name from its resemblance to a teacup. It consists of a U-shaped price
action as the cup - and a small but sharp decline at resistance, as the handle.

As you can see in the up-trend, the price has set a resistance. When there is a
consolidation phase, the price retraces its lower level. When the price has gone
back up to test the resistance, set by the old high, it will meet a sharp decline
because the people who bought it at the first peak will try to liquidate their positions
as close to the break-even point as possible. The best time to enter the market is
when the price breaks resistance and progresses to the top of the cup, then, target
the height of the formation from the breakout points.