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CUP-WITH-HANDLE
The most common highly successful chart pattern is the Cup-with-Handle. This pattern often emerges at the beginning of a run-up in the stock price.
• Buy point occurs when a stock moves up through the handle’s high on heavier than normal volume, at least a 40% increase above the stock’s average daily volume.
• Handle should form in the upper half of the cup, and within 15% of the old price high.
• Base Length – base should occur over at least 7 weeks, but can last much longer.
DOUBLE BOTTOM
After the Cup-with-Handle, the second most common
chart pattern is the Double Bottom.
• It looks like the letter “W”, but the second leg of the W should
go a little lower than the irst.
• The pivot, or buy point of the double bottom is just as the stock surpasses the middle of the “W” as it’s coming up from its second bottom.
• Sometimes, a double bottom may form a handle area, in which case the buy point will be 10 cents above the high of the handle, just like the cup-with-handle.
FLAT BASE
The lat base is usually a second-stage base pattern.
• It has a minimum time frame of 5 weeks rather than the 7
weeks minimum required of the cup-with-handle or double bottom.
• The lat base has a mild correction, not more than 15%, and
the price range will usually remain tight throughout the pattern.
• The pivot or buy point for the lat base is 10 cents above its
previous high on volume at least 40% above its average daily volume.
