| The CUP and HANDLE is one of the harder technical patterns to identify while it is forming. It can take on many different appearances and proportions masking it's shape until it is nearly finished. |
| In the first figure above, the line drawing shows what a picture perfect Cup and Handle would look like. However, it is not often seen this clearly and symmetrically formed. The dashed blue line is showing where a horizontal handle would be, but a downward sloping handle is more the norm and allows for an easier definition of a breakout point. |
| The breakout point, and level at which you want to make your entry, is the level at the highest point of the end of the handle that is the highest value. This could be the left or right end of the handle. |
| This explains why a downward sloping handle is the easiest to trade because the breakout has already been defined. When the handle is sloping upward, less traders will know when to jump on the breakout and therefore a slower volume move will occur. |
The faster the volume builds, the longer the run will last and therefore the higher the rise before a retrace occurs. |
| Remember, it doesn't matter how many classical patterns YOU can recognize. The only reason the price is going to rise is if there are MANY OTHERS that also recognize and begin to buy on the same pattern. |