thvorti.blogg.se - Stock patterns

#STOCK PATTERNS HOW TO#
#STOCK PATTERNS SERIES#

On the chart above, notice the 200-day moving average (orange line) is in a clear uptrend. Putting it all together, this chart of LinkedIn ($LNKD) shows a valid cup and handle chart pattern, based on the technical criteria above:

Handles should be at least 5 days in length and not form below the 50-day moving average.

Handles that retrace more than 15% are too volatile and prone to failure.

The handle itself should drift lower, and is typically 5-10% or so in width.

The handle usually forms 5-10% below the highs of the left side of the pattern.

As the base rounds out and the price returns back above the 50-day moving average and holds, be on the lookout for the “handle” to form.

The base typically forms on a pullback of 20-35% off the highs (deep correction), and is at least seven weeks in length.

The 50-day moving average should be above the 200-day moving average, and the 200-day moving average should have already been trending higher for at least a few months.

Stocks that are breaking out to new all time highs are ideal because they lack overhead resistance. Do not go looking for cup and handle patterns with stocks trading at or near 52-week lows! The best cup and handle patterns form near 52-week highs.

The chart pattern must form within an existing uptrend, and stock must be at least 30-40% off the lows.

#STOCK PATTERNS HOW TO#

How To Identify A “Cup and Handle” Chart Patternįollowing are the technical characteristics of a cup and handle pattern, along with an actual visual example: Bullish Confirmation Through Tightening Price Action.How To Identify A “Cup and Handle” Chart Pattern.Study the following chart patterns closely, as they will enable you to develop your eye and eventually read stock charts like a pro. Flat Base Consolidation (Shallow Correction).In this article, we will show you how to spot the two top “basing” chart patterns that precede the best breakout buy setups: That uptrend is important because it shows the stock has already built up a track record of price growth, and has gained support from big institutional investors. This leads to what is known as a “buy setup.”īases typically form after a stock/ETF has already experienced a substantial price increase of at least 30%.

#STOCK PATTERNS SERIES#

They occur when a stock’s price falls, then consolidates over a series of weeks or months.

For stocks, base patterns serve as that foundation. It’s sort of like the foundation for a house if it’s not solid, the levels above can become unstable. Before a stock can launch a big price run up, it must first have a solid base pattern to build upon. Stock breakouts are about more than simply buying stocks that are trading at new highs. In order for a breakout to be valid and without a high risk of failure, a stock must first possess a valid base of consolidation on its chart pattern.Ī base is crucial to an uptrend, as the stock or ETF builds a strong foundation to launch the next advance.