Cup and Handle Patterns

Cup and Handle Pattern on GOLD

Cup and Handle Pattern on GOLD

Cup and Handle Pattern on GOLD is a classical chart pattern which is located in an interesting spot. It is also an atypical pattern because of its dimension. Therefore, let’s take a closer look.

The premise

This is the tenth article from a series of twelve in which I explain how did I make +8.72% in a single trading day. The previous articles are #AMZN, #MMM, #TRV, #TSLA, AUDJPY, AUDUSD, USDCAD, FTSE100 and SP500. Now, if we take a look at the daily chart of GOLD we’ll see that there is an obvious uptrend. And, at this point there is a very huge cup and handle pattern. But, even so, it is still a cup and handle pattern.

Cup and handle pattern on GOLD daily chart detail

Cup and handle pattern is only a reversal pattern

I know, that there will be a lot of traders who might argue that this is not a cup and handle because the cup and handle pattern is a reversal one. Surprise! The cup and handle pattern is also a continuation one. It depends on its location. Or, you can think about it like this: this pattern simply reverses the 15% drop from GOLD. So, it can be considered a reversal pattern for the 15% drop. And it can be considered also a continuation pattern for the main daily trend.

How did I trade the cup and handle pattern on GOLD?

I simply placed a buy stop order slightly above the resistance of this pattern. And I considered resistance the March 26th 2020 daily candle high. Consequently my order is open on April 6th 2020.

The outcome

Let’s take a look at what happened after the breakout. The price went up, and then retested the resistance of the pattern. Keep in mind that this resistance, once broken should act as a support. And it did. So, after the retest the price went up again. And, for now, it formed a symmetrical triangle which is also a neutral pattern. Meaning that the price can go in both directions (up or down).

The outcome of the cup and handle pattern on GOLD daily chart

The conclusion

The most important thing to be mentioned here is that, again I closed my trade too early. And as obvious as it is, I should’ve let my trade run. But, I’m still struggling with this bad habit. And with enough persistence, one day, I’ll manage to do it. The second important thing is that I encourage you to take your time to read the entire series of articles of how did I make +8.72% in a single trading day. Just click on the previous link and you’ll find inside the article all the information for all the trades that I had at that moment. You’ll find a lot of interesting patterns with different outcomes. So, until my next article stay tuned and stay safe. And the most important: don’t forget to follow Capital Patterns on Twitter and Facebook.

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