Cup and Handle Pattern: PART 2

part 2 read part 1 first on my profile. thank you 5. Real-World Example Suppose a stock forms a cup with resistance at ₹500 and a bottom at ₹400. The cup depth is ₹100 (500 - 400). The handle forms around ₹480 before breaking out at ₹500. Target Price = ₹500 + ₹100 = ₹600 Stop-Loss = Below ₹480 (handle low) 6. Common Mistakes to Avoid Entering before the breakout is confirmed. A very deep handle (more than 50% retracement of the cup). Ignoring volume confirmation. Misidentifying a V-shaped cup (it’s weaker than a U-shaped cup). 7. Variations Inverse Cup and Handle (Bearish version) → Signals a downtrend. High Handle (Where the handle forms near the highs) → Often results in a stronger breakout. 8. Why It Works The rounded cup signifies accumulation as sellers gradually disappear. The handle forms when early buyers take profits, creating a healthy consolidation. A breakout confirms momentum as new buyers enter.