Cup with Handle pattern
This ProRealTime indicator identifies the famous “Cup with Handle” price pattern and ” Cup with Handle Inverted”
It works on all markets, with any timeframe and for any type of chart: candlesticks, bar chart, Heikin ashi, Kagi, Renko, tick charts, etc.
Cup with Handle Inverted
Cup with Handle
HOW THE INDICATOR WORKS:
In the domain of technical analysis of market prices, a cup and handle or cup with handle formation is a chart pattern consisting of a drop in the price and a rise back up to the original value, followed a smaller drop and a rise past the previous peak.It is interpreted as an indication of bullish sentiment in the market and possible further price increases.
The cup part of the pattern should be fairly shallow, with a rounded or flat “bottom” (not a V-shaped one), and ideally reach to the same price at the upper end of both sides. The drop of the handle part should retrace about 30% to 50% of the rise at the end of the cup. For stock prices, the pattern may span from a few weeks to a few years; but commonly the cup lasts from 1 to 6 months, while the handle should only last for 1 to 4 weeks.
The “cup and handle” formation was defined by William O’Neil”
Interface of the indicator:
The vertices of the pattern correspond to a zig zag indicator created by us, which allows the use of ProBackTest and ProScreener.
The zig zag size control variables allow you to manage the size of the pattern detected by the indicator.
- ZigZagPerc : Enable or disable the PricePercent variable.
- PricePercent: Percentage value of the difference between a maximum point and a minimum point of the zig zag indicator. This variable affects the size of the Pattern.
- Dynamic: Enable or disable the dynamic variable.
- Factor: Variable of the “Dynamic” function, this function allows automatic detection of patterns based on market volatility.
- ZigZagVal: Enabled or disabled the PointsValue variable.
- PointsValue: Value of the difference expressed in points, between a new maximum and a new minimum. This variable affects the size of the Pattern.
- Accuracy: variable, it is possible to search for patterns with an accuracy in a range between 0 and 100%. Accuracy makes it possible to establish the alignment between the upper left edge and the upper right edge of the cup. You can observe a wide variety of patterns without discarding any possibility, or you can have an opportunity to have filtered too severely. 90% is the default threshold, but it is up to you to configure this parameter according to your own style!
- ShowData: Enable or disable control to show the complete data of the figure, explained below.
- ObliqSignal: Enable or disable the oblique trend line that generates the signal if it is punched, explained below.
- View: Enable or disable the visual of the triangles .
- Rotation: Adjust the rotation of the figure, which can change between the markets.
- Alpha: Adjust the trsparency of the figure.
- CupBull: Enable or disable the search for the Bullish Pattern.
- CupBear: Enable or disable the search for the Bearish Pattern.
- ZigLine: Show Zig Zag line to set the parameters quickly.
- MovAvgFilt: Enable or disable the moving average filter
- MovAvgPer: Moving average value, the bullish figures will be displayed only if they above the moving average for the set period, and vice versa for the bearish figures
ShowData: It contains the main information of the Pattern described in literature.
- Cup depth
- Handle Deph
- Cup width
- Handle width
- Retracement of the handle on the length of the cup
- In litereture is described that the handle’s retracement should be >30%<50%.
- The average of the volumes at 200 periods
- The volume of the candle that creates the breakout
- The percentage increase between breaking volume and average 200 of volumes
- In litereture is described that, the volume at BreakOut Candle should be > 50% of “normal” volume, I’ve considered “normal volume” the moving average of the volume of 200 period
- This function allows you to change the breakout level of the figure.
If the pattern is bullish, the BreakOut signal will occur on the passing trend line between the maximum to the left of the cup, and the maximum to the left of the handle. Conversely if the pattern is reversed.
- In the next image I show an example for an inverted pattern
- Adjust the rotation of the figure, which can change between the markets.
Advantages of using the “Cup with Handle” pattern and ” Cup with Handle Inverted” patterns indicator:
- Automatically identifies the “Cup with Handle” price pattern and ” Cup with Handle Inverted”
- Compatible with all ordinary timeframes and even on tick-charts!