The CUP patterns are considered to be very important or powerful for analyzing the trends of the prices of stocks. During the rounding bottom, the volume is expected to be as low as possible, and this is the period during which gradual accumulation of volume takes place. The correlation between the market to the stock should be low during the mid of the pattern.
In line with the above mentioned analysis, it was observed that CUP pattern was formed in the chart for the company ‘ Vijaya Bank’, during the period May 2016 to October 2017 which amounts to atleast 1.5 years to form this pattern, and based on this pattern the following figures have been arrived at:
Stop Loss – Rs 29.50
Entry price – Rs 51.90
Target – Rs 74.30
The price trend is bullish and it advisable for the trader to adopt the long position at the entry price, that is he has to buy the stock at entry price and sell it at target price,ensuring the minimum loss at stop loss point.
