Posted by: Bob Lang in Technical Patterns, Technical Pattern, Technical Analysis, Cup and Handle, CME on Mar 12, 2010
One of the best patterns to play in a bull market is the cup/handle, coined appropriately by William O'Neil of IBD fame. This chart pattern shows a big surge after a pause (cup) in the stock price then a rest on lower volume (handle), which tends to look like a coffee cup (hence the name). This is a timeless pattern that has worked in every bull market. Last week, I was scouring chart after chart and all I could find were these patterns. I don't recall having seen so many setups since 2004, which turned out to be a pretty good year for stocks. An example of a current cup/handle is below.