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Cup and Handle Patterns

Cup and Handle Pattern on #TRV

Cup and Handle pattern on #TRV

Cup and Handle pattern on #TRV is one of the trickiest from this period. I’m saying that because, from time to time a trader can be shaken from his or her position. As a result, the trade is closed with a loss just to see the price reverse into the initial direction.

The premise

Let’s take a look at the #TRV (The Travelers Companies, Inc.) daily chart. As I said earlier this is a tricky pattern. Why? Because you can easily see that this chart evolved from a cup and handle pattern into a variant of ascending triangle.

cup-and-handle-on-trv
Cup and handle on #TRV

What happened with the cup and handle pattern?

I placed my buy stop order just slightly above the January 8th 2020 candle and it was activated on January 9th. On January 10th my position was closed for a full risk loss (-0,3% from equity). Usually, I trade the same pattern twice, but, unfortunately for me, I didn’t placed another buy stop order for the ascending triangle that evolved from the initial cup and handle pattern.

The outcome of the cup and handle pattern

After just a few days, on January 15th 2020 the price retested again the cup and handle resistance. Consequently, the initial cup and handle pattern just morphed into an ascending triangle. Both, patterns have the same implications. Let’s see what happened after the final retest of the resistance.

the-outcome-of-the-cup-and-handle-on-trv
The outcome of the cup and handle on #TRV

As you can see, the outcome is a successful breakout. There is one important thing here. The January 23rd 2020 is the earnings release date for #TRV. Also, you can find in this article: Inverted Head and Shoulders on #MMM how important is this kind of day.

The importance of an EPS release date

EPS or earnings per share release date can easily turn a winning trade into a loss. And, that can happen very fast. Because, you never know what will happen in this day. Almost any time there are rumours about the result. Though, I’m sure you know that there are also surprises. Therefore, let’s see how the earnings release date changed the outcome of this trade.

the-outcome-of-the-earnings-release-date-trv
The outcome of the earnings release date #TRV

The conclusion

The conclusion is simple, especially with the stocks. First of all, when you place a pending order, you need to be sure that you know the earnings release date. Also, you need to keep an eye on any instrument which didn’t worked out as you thought. Because, there is a good chance that your initial pattern to morph into another tradable pattern. And, for sure, you don’t want to miss the second breakout. I think I don have to mention that you need to keep your money and risk management under control and to not think about the small loses.

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