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Cup and Handle Chart Pattern

The cup and handle pattern is a good indication of a break out trend. . The cup is in the shape of a "U" while the “handle” will usually show low volume

As the Stock comes up to test the old high, selling pressure occurs by traders who bought at or near the previous high. This selling pressure causes the stock price to trade sideways. At this point, the stock is poised to break out.

Cups with more prolonged “U” shapes will signify a stronger break out.
Cups with “V” shapes should be avoided.

The volume during the handle stage should be low volume. As the stock breaks out of the handle, volume should rise accordingly.

 

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