Cup Pattern: A trading setup that we follow to deliver top-notch recommendations with examples!
A cup pattern is a powerful technical setup that is used to capture strong breakouts on various time frames.
Swing trading is arguably one of the favourite trading styles among traders. While technical indicators are extensively used by market participants, price patterns are actually the game changers! Price patterns tell a lot about the stock’s behaviour in the past and also help to understand the psychology behind the price movements. Understanding price patterns is of utmost importance for any trader, as it puts them at a significant advantage over others. So here, we bring to you one of the most technically-advanced price patterns, i.e. the cup pattern that we, at DSIJ, often use ourselves!
What is a Cup pattern?
The cup pattern is one of the solid technical setups in swing trading. It is used to capture strong breakouts on various time frames. On the technical chart, it resembles a ‘U-shaped’ price movement. A breakout is registered when the price movement crosses above its prior swing high with a huge volume.
As we said earlier, many traders (including us) use this setup to get substantial gains. We have recommended trading ideas to our readers based on the cup pattern setup in our Flash News Investment weekly journal. Our readers have consistently benefitted from this trading strategy. Here are some examples of the trading setup that our clients have traded on!
We had recommended Adani Power on August 4, 2022, when the scrip was trading at Rs 347. The stock formed a nine-week cup pattern and registered a strong price volume breakout. The technical parameters indicated strong strength, which added support to our belief. Consequently, the stock jumped over 25 per cent in just two weeks to hit a high of Rs 432 level. Not bad, isn't it?!
We had recommended our clients to buy the stock of Federal Bank on July 28, when the scrip was trading around Rs 107 level. It broke out from its 15-week cup pattern with huge volume. As per our expectations, what followed was a 20 per cent upward rally in the next six weeks.
A ‘BUY’ recommendation for the stock of Asahi Glass India was issued to our clients on August 25, 2022, when the scrip was trading at Rs 627 level. The volumes were above average, which confirmed our bullish stance on this stock. Our clients booked profit of over 10 per cent in less than two weeks.
Such top-notch recommendations are exclusively available only to our Flash News Investment readers! If you want to be a part of our DSIJ family, consider subscribing to our Flash News product by visiting the link below:
https://www.dsij.in/products/magazine/flash-news-investment