I promised, I’ll be sending out profitable trades based on this pattern alone.
I showed you how the Cup of T pattern works, what to watch out for and where to get in and out.
Today, I want to share three tips you can use to spot your next profitable trade using the Cup of T pattern
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Let me explain… Simply look at the distance between the high and low of the small rounding bottom.
The ideal handle’s distance is when the high and low of the small rounding bottom is less than 50% of the height of the big rounding bottom.
Let’s bring back the same chart from last time which will explain better.
1) Find the mid-level between the high price and the low price of the Big Rounding Bottom (cup).
2) See if the smaller rounding bottom (handle) touches or breaches below the mid-level (horizontal blue line).
If the distance is more than 50% of the big rounding bottom then this will be considered a fake handle.
And you should avoid trading this as a Cup of T pattern.
In fact, if the distance of the handle is more than 50%, the Cup of T pattern turns out to be a completely different pattern altogether with different rules. (I’ll have to save that pattern for another day).
Tip #2: It’s called a rounding cup for a reason
When you’ve spotted a potential Cup of T pattern, make sure the cup is more rounded than V-shape.
A rounding big bottom (cup) has a higher chance of being a winning trade than a narrow V-shape looking ‘cup’.
Why? The problem with a V-shape is that the price of the market is far too volatile. This means you’ll see the price falling quickly and then rising quickly. These kinds of volatile movements are ones to steer far away from as the market’s direction will remain uncertain.
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Steer away from the V shape
Tip #3: Buy the Cup of T when the trend is established
Before you decide to jump on the first Cup of T pattern you see, first make sure of one thing:
That the previous trend is up!
If the trend is up, there is a higher chance you’ll find a profitable trade with the Cup of T pattern once the price breaks above the brim level.
Why? Having a previous up trend and a break up out of the brim level, will tell you that the market is ready for its next leg up.
And so the probability the market will move up is a lot higher, which will give you a higher chance at winning with your trade.
Why these three tips are essential to your Cup of T pattern success
Tip #1: Make sure the handle is less than 50% of the cup
Tip #2: Make sure the Cup of T pattern is round and not V-shape
Tip #3: Make sure the previous trend is up
When you trade these Cup of T patterns and consistently follow the above tips to a T, your chances of banking profitable trades will increase, not by 10%, 20% or even 30%, but by 50%.
Now that you understand how the pattern works, how to get in and out and the three tips to double your chance at profiting, you’re ready for the next step.
Always remember, “Wisdom yields Wealth”