Predicting the bottom of the quotCup and Handle formationquot
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thread: Predicting the bottom of the quotCup and Handle formationquot

  1. #1

    Predicting the bottom of the quotCup and Handle formationquot

    Good morning everyone,
    I'd love to talk about a nice little pattern that people can search for and hopefully add on to with the support of the community. Just what exactly is this about? Recall the cup and handle formation? What if I told you we can input about 5 - 25 percent of a 100 percent correction, however certain conditions have to be followed. It's time to take a look at the basic stepup about the tf I use it on; 4h Nevertheless, this may be implemented on almost any Timeframe and wil show examples of it. Shall we start?

  2. #2
    Let us get started.

    First you will simply need two moving averages.

    Period: 20
    MA method: Straightforward
    Apply to: close
    Colour: Red

    And

    Phase: 10
    MA method: Straightforward
    Apply to: close
    Colour: Green

  3. #3
    yes
    This is what we will look for as this case shows an inverted cup and manage



    We highlight the number 1 as it represents the crossing of both MA lines awarded.
    We then permit the currency to create whatever movement it will create, in this situation a transfer up!
    Now look at number two. This was as the next crossing of the MA lines that in this instance represents a slowing down in price action.

    This is the place where you take your commerce... Considering that the transfer was up and the price action has slowed down we now will assume the price will retrace all the way down making a 100% change which in this situation will be an inverted cup and manage. Please note I said assume as we are only trading an expected formation...

    Now here's your sl and tp

    The red line is your sl.
    The purple line represents the 100% correction along with the price the last move you were watching started from.


    Straightforward enough so far?

    This is the beauty of this method. Is it profitable but one of the cleanest formations to enter to within the higher time frames. We must note that variations must be accounted for and that's what we can go through together as a community. In due time, we'd have accounted for all the variations in which we could come with money management to apply to.

  4. #4
    Hi Tfh,

    Intriguing, I subscribed.
    Do we just adhere to the cross over, two MA.
    Or we have to see more than that. Plz
    explain. thanks.

  5. #5
    Hello, intriguing, I snapped. Do we only adhere to the cross over, two MA. Or we must see. plz explain. thanks.
    For now concentrate on utilizing those rules on almost any Time frame. However, based on how the candles transaction in the side of the cup will determine how your stop loss is honored. Examlple. In the picture you notice that no candle closed at or bekow the reddish MA line. Meaning the sl is to be honored as mentioned. Where like any candle could have closed at or below the Red MA lineup it woulf. Have led to a different result for the sl.

  6. #6
    Let us take a look at the setup described yesterday during the price action.

    Notice here we have number 1 representing the beginning of the left side of the cup. Here our baseline is the low of the first candle to close at or below the lower ma line. This is a variation of what we saw yesterday.

    Number 2 marks the crossing of the MA line which provides you with a sell sign and a stop loss price. Bear in mind the sl is the high of the left side of the cup.

    Now let us see how this one played out....

  7. #7
    Let us have a look at the setup described yesterday during the current price action. image Notice here we have number 1 representing the beginning of the left side of the cup. Here our baseline is the low of the first candle to shut at or below the lower ma line. This is a version of what we saw . Number 2 marks the crossing of the MA line that provides you with a sell sign and a stop loss price. Bear in mind the sl is that the top of the left side of the cup. Now let's see how this one played out... image
    Look here to see how following the tp was struck how we had yet another cup and handle formation on the exact same tf.


  8. #8
    Sothis one had been on 5M time frame, and we got 23 Pips aprrox.
    Do we need to look at all TF, if we could find any Cup Handle formation?

  9. #9
    Is this just great for EUR/USD??

  10. #10
    so, this one was on 5M time frame, and we got 23 Pips aprrox. Do we have to check all TF, if we can find any Cup Handle formation?
    It works with almost any pair in any time frame. If you'd like higher frequency subsequently reduce the tf. More pips improve it. On the other hand, the rules never change. We still have ALOT of work to perform. Including a bit of coding. The alot of work deals with variants of the left side of the cup. These variations will create your stop loss 100%. Some formations the stop reduction may be on a touch of their price given or a close at the price given.

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