Decker forms cup with handle before breakout
Posted on December 21, 2007
Filed Under Profitable Trader |
Decker’s is the perfect example of one of thegreatest chart patterns that lead to huge gains. Here we break down the requirements of the cup with handle pattern.
First, the stock should show at least a 30% price increase in it’s prior uptrend. Once the cup starts the stock should decline about 20% to 30% from the absolute peak to the low of the cup. A proper cup with handle needs to take at least seven or eight weeks to form. The handle may only last a few weeks but will tend to drift downwardalong it’s lows, preferably on decreasing volume. The handle itself should pullback no more than 10%. DECK finally broke out on above average volume and thereafter has continued to rise and has become one of the markets best performers. If you would have bought at the high of breakout right now you would be
sitting on a 334% gain.
There is another important lesson here. This pattern took 19 weeks to complete. You do not need to trade often. Jesse Livermore would trade only 5 or 6 times a year and had amazing returns. Look for high-quality stocks that break out of sound base patterns.
Comments
Leave a Reply
