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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-detail
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
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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