In this live Forex trading example I managed to record a successful trade taken based on a Cup and Handle chart pattern. This is one of the extraordinary patterns that you can see on the chart. I managed to identify a Forex Cup and Handle on the chart and I tackled the situation with a long trade.
Cup and Handle Chart Pattern Signals
- The price has been following a bearish trend.
- Suddenly, a horizontal move appeared on the chart.
- Then, the price increased and broke the bearish trend line, forming a cup.
- A correction of the price increase formed a handle on the chart.
- These two parts formed the Forex Cup and Handle.
- The price then broke the upper level of the Cup and Handle chart pattern, which brought the confirmation of the pattern.
Stop Loss and Target of the Forex Cup and Handle
I placed my Stop Loss order below the lowest point of the handle on the chart. This way the trade was protected.
The target of the Forex Cup and Handle chart pattern equals to its size measured from the mid point of the cup’s bottom and the line that connects the two tops of the cup.
Live Trading Example
Notice that the end of the handle came as a test of the already broken trend line. This way the bearish trend line was turned from a resistance into a support. This gave additional confirmation that the price is likely to increase. This is exactly what happened. One hour later the price reached my take profit level completing the trade.
Bottom line, I managed to collect 46 pips from this trade, which equals to 0.42%. The trade took only 1 hour to complete. This is why I believe this is one of the best possible outcomes in this situation. If we could all make 0.42% profit every hour…