Cup and Saucer Formation.

Discussion in 'Technical Analysis' started by ER9, Dec 21, 2003.

  1. ER9


    Is there an ideal time period that the cup portion should take to develope? Does it matter if it takes weeks versus months to form?

  2. I see them on a 15 minute chart as well. They, like most chart patterns appear in most time frames IMO.

    I look at chart patterns like Broccoli. It looks the same no matter how how you break it off. A tiny little bunch looks just like the entire stalk you brought home. Or any size in between for that matter.

    To me, there really is no magic time frame. I like to use multiple time frames. When they all converge, it.
  3. soylent


    As the last post mentions:
    Cup/handle works in every time frame. The more convergence the better.

    a) Watch your overhead trend line: If there is resistance above the breakout on a larger timeframe, (like a descending trend line), it acts like a bull trap and will fail. Usually quite brutally.

    b) If you're trading it and you know you want a piece of that stock, look to buy at the lower piece of the handle -- close above the low of the handle w/ a stop at the low. (Intraday that can be hard to do because all the traders see the handle and spike it back to the top). This way: a) you get a better return and b) if the breakout aborts you still get out clean.

    Good luck w/ it!
  4. soylent


    Realized you asked about the 'time frame' -- I guess you mean # of bars to form?

    Mostly, the shorter, the better. Because I don't want to watch it form all day/week/month/year long.

    On a DAILY, it should form the CUP portion in about 2 weeks (10 trading days) to attract max attention. Usually the 'top' of the cup hits a new 52-week (or, at least) 20-day high before the 'end of day' folks see it. Then, they prep all their orders to buy the handle. If it takes more than 10-days, it probably won't make the cup pattern any time soon. Then, you get into 'big w's' and all that ilk...

    As for saucers: I don't usually trade them. Too slow as a pattern. They are quite dynamic once they get moving but who knows when that will happen.

    Take a look at AN for an interesting cup/handle. It's forming on the Monthly, weekly, and will likely form up on the daily, shortly. As for time frames -- it's a bit long for me but AN isn't a real 'day traded' stock. It's like a 'natural' c-cup vs. the stuff you see on steriods/implants on NASDAQ / QQQ.
  5. I really enjoyed reading this, thank you.