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Cup and Handle Patterns

Cup and Handle on USDPLN

Cup and Handle on USDPLN

Cup and Handle on USDPLN. This is one of those challenging patterns, because it is a variant of a cup and handle pattern. It’s that kind of variant in which we have a wide cup and a small handle. Let’s see what this means.

The premise

In this case of cup and handle pattern the variation is that we have a wide cup and a relatively small handle. So, what does this mean? Usually a small handle in this case has similar implications as a smaller right shoulder into a head and shoulder pattern. Or an inverted head and shoulder pattern. Both means that the market is eager to complete the pattern and move the price rapidly into the target.

cup-and-handle-on-usdpln
Cup and Handle on USDPLN

Do we have a cup and handle pattern on USDPLN? Or not?

Technically speaking this is a tradable pattern, so, all we have to do is to establish the risk, the reward and to place our order and wait. Only the time will tell us which outcome we’ll get.

The moment of truth with cup and handle pattern on USDPLN

Let’s see the outcome of this trade. Before that, I’d like to mention again to keep in mind that most of the patterns will fail so, we need to be very careful with the risk and money management.

the-outcome-usdpln-part-one
The outcome USDPLN part one

As you can see that didn’t worked well. But, it didn’t worked that bad either. There’s no surprise in it. That’s because in the morphing process the market offered the chance to exit with a small loss. That’s way better than a full risk taken in the first place.

Is there a good part?

Guess what? There is a good part. The fact that the patterns tend to morph into something else came with an advantage. It offers you another chance to capitalise your account with the next pattern. Which I did, in this case.

Double bottom with false breakout in support with higher low

This is how it’s called the pattern that evolved after the initial breakout. And yes, it is a very tradable pattern with a very good outcome, most of the time. Why is that? Because the false breakout trapped the sellers who added to their initial position. It also trapped the sellers who missed the initial breakout and chased the market. That’s the powerful story said by this pattern. You can see with your own eyes the outcome of this one. That’s the type of trade that pays for some of the previous losses.

the-outcome-usdpln-part-two
The outcome USDPLN part two

The conclusion

Even if those were two different trades, I decided to tell you about both in a single article because they were related. The conclusion here is that you don’t have to be disappointed after a few losses in a row. That’s because there will always be another trade which might pay for all the previous losses and much more. Keep in mind that a good risk management, a good money management and a good risk reward ratio keeps you alive in the market. Those are three lessons that I learned from Peter Brandt‘s book: Diary of a Professional Commodity Trader. I also recommend you to read Peter’s blog. That’s literally a gold mine for any serious trader.

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