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Tagged: CUP Pattern
What is rounding bottom / Cup pattern? What are their conditions to determine the bullish trend?
The Cup pattern indicates the gradual accumulation of stocks by strong hands, which happens at longer duration. The rounding bottom will be visible with cup shape and low volume in overall trend.
Condition for bullish:
Cub shape should be visible with line charts with longer duration.
During the rounding bottom the volume should be low.
The correlation of the market movement will be low,i.e the market movement does not affect the stick price positively or negatively.
A Cup pattern resembles the shape of a cup on a chart and it is a bullish continuation pattern where the upward trend has paused and traded down, but will continue in an upward direction upon the completion of the pattern. It takes several months to year to form the cup pattern and the volume is expected to be very low during the formation of a cup pattern.
Conditions to determine the bullish trend : –
1) The cup pattern should be preceded by an upward move, which stalls and sells off.
2) The sell-off should form the initial part of the cup pattern.
3) After the sell-off, the share should basically trade flat for an extended period of time with no clear trend.
4) The uptrend should start with significant volume giving signal for the bull run.
5) The bullish trend can be confirmed once it breaks the two peaks of the cup with significant volume.
The cup pattern is accumulation pattern
It usually takes a longer term (more than a year)
Volume is low in the bottom
long position can be created when the cup is filled
It is a typical investment pattern
Cub shape should be visible with line charts with longer duration. During the rounding bottom the volume should be low.
The bullish trend can be confirmed once it breaks the two peaks of the cup with significant volume.
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