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Cup and Handle Patterns

Cup and Handle Pattern on SP500

Cup and Handle Pattern on SP500

Cup and Handle Pattern on SP500 is a classical chart pattern located at the end of a 35% drop. Therefore, it might has bullish implications.

The premise

This is the ninth 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 and FTSE100. Now, let’s take a look at the daily chart of the SP500. Therefore, we’ll see a very strong uptrend at the left part of the chart. And a 35% drop at the right part of the chart. So, at the end of this 35% drop we have a cup and handle pattern, which in this case is a reversal one.

cup-and-handle-pattern-on-sp500-detail
Cup and handle pattern on SP500 daily chart detail

How did I trade the cup and handle pattern on SP500?

I simply placed a buy stop order slightly above the resistance. And, in this case I considered resistance the March 31st 2020 daily candle high. Consequently my order is open on April 6th 2020. Let’s see what happened after the breakout.

The outcome

After the breakout, the price made a pinbar. But, as you can see in many other cases, like here for example: Ascending Triangle on ASX200, this is not a bad sign. I actually considered it a good sign. Because I saw this candle into a breakout area so many times before. So, after the pinbar, the price continued as it was supposed to do it into a valid breakout. Below is what happened next.

the-outcome-of-the-cup-and-handle-pattern-on-sp500
The outcome of the cup and handle pattern on SP500 daily chart

You might ask yourself why I decided to collect all my profits that early? I explained everything here: Verified Trading Account: +8.72% In a Single Day.

The conclusion

The conclusion is pretty much the same for this entire series of twelve articles. And I encourage you to take your time to read them all. 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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