Cup and Handle
The cup and handle is a bullish continuation pattern with two parts. The cup is a rounding bottom, and the handle that follows immediately is a flag. As a continuation signal rather than a reversal, the cup and handle is valid only as long as the trend continues. Figure 6.13 includes three examples of the continuation offered in the cup and handle.
Figure 6.13 Cup and handle (Chart courtesy of StockCharts.com)
The first one occurs as the downtrend bottoms out and begins rising, forming the first cup. The handle, a flag, takes up two months and sets up a continuation for the trend that started three months before.
The second example ...
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