Translated from Russian by Google Translate
2 Сентябрь 2009

Studying technical analysis of forex. The figure continued a trend «cup»

One of the distinguishing features, which is famous for its technical analysis of Forex - is the presence of a large number of different models that can meet the market in the trading process. Refers to the various figures, which indicate to us to stop or continue the trend.


We are all accustomed to the standard figures of the «double bottom», «double top» and so on, but the market is sometimes unpredictable, and maketh such pirouettes, which are very difficult to foresee. It is for this reason, if you are using in their trading technical analysis of Forex, you simply have to gather in his memory database specific to your trading style figures technical analysis, that in the event of a similar situation in the market to be able to identify the shape of the graph. And then have to act on an established scheme. If this figure to continue the trend, then boldly go after him if that figure to reverse the trend, then act accordingly.

So today we’ll talk about an interesting figure - of the family figures, predicting the continuation of the trend. It is called «Cup with a pen». This model, as I have said, is a model to continue the trend. It shows the time of consolidation, which is accompanied by a breakthrough. The model consists of two parts: direct and cups her hands. Herself a cup formed at the time of raising prices. Model called a cup, because it is exactly repeats its shape: a round bottom. After the cup itself will be formed, there comes a small period of consolidation rates, resulting in price describes the motion, which form the handle. Handle always arises only on the right side, that is the right of the cup.

Later, when there is a breakthrough range of prices, which formed the handle, it gives us to know what will be continued bullish trend. This situation is shown in Figure 1.

technical analysis of forex

Fig. 1

And now analyze in detail all the details of this model.

1. The first and most important rule is that in this case, technical analysis of Forex allows us to identify on the chart this particular model - is the trend! To say that this is a continuation pattern, should be a prior trend. Ideally, this trend should be prolonged, but not too long, because the longer it is delayed, the greater the likelihood that the model will not signal the continuation of the trend. Here everything is clear. Any trend sooner or later ends, so too long a trend will have little capacity to continue its movement in a given direction.

2. The model should be a cup. Not a triangle, not a rectangle, namely, a cup, that is U-shaped, or at least, the bottom should be rounded. V-shaped model can not guarantee a reversal, because it is very sharp. A roundness will signal that the cup is a figure of consolidation, which has solid support in the form of a U-shaped base. Actually, ideally, the cup will be on the same level. That is right most will be at the level of the left peak, but in reality it is very rare.

3. The next criterion is the depth of the cup. Ideally, it should recover no more than 1 / 3 of the previous raise. But it is not often the case in, so in most cases, recovery is in the range from 1 / 3 to 1 / 2 of the previous raise. In extreme cases, recovery may amount to 2 / 3, but this limit. Incidentally, this corresponds to the Dow theory.

4. In principle, the handle is not too difficult to identify. It is always formed on the right side. After the maximum, which will be on the right side, the market place a slight pullback. This is the roll back and form a handle. Incidentally, in some cases, this can handle to look like a pennant or flag. Make sure that, once again looking at Figure 1. You must remember that the pen is the final step before the breakthrough.

In most cases it is 1 / 3 of the height of the cup. It is believed that the smaller the recovery, the bulls have great potential, the stronger will be a breakthrough, and the farther he goes. From my own experience, I want to advise you, always wait until the price breaks through the resistance level, which is formed by the upper edges of the formed cup.

5. Remember one important feature. In this case, technical analysis of Forex is a very good adviser to us, because if you know its features, you’ll feel and intuitive connection to time. What am I? In this case very important time factor. The greater the time interval, which formed the model, the greater its potential and the greater your opportunity to profit. If the figure is formed on the daily candle, say, within 6 months, then the handle should be formed up to 1,5 months.

6. Use the volume indicator (Volume). Confirmation of the true breakthrough will serve as a dramatic increase.

7. Purpose after the breakout. Once the price will overcome the resistance line, your line, which you will need to navigate, should be equal to the distance from the right cup to the point of maximum output. This distance in this case equal to the length of the segment from the right cup to the peak of its foundation. Once you measure this distance, impose it from the right peak. I think it is all clear.

Feature, which has a technical analysis of Forex, is certain nuances in the analysis of graphic shapes. When we analyze the chart patterns, in most cases it is very important to understand the essence of the model than the detailed information about it. So let us repeat once more the important nuances concerning this model. Mug - in this case is a consolidation, which is presented in the form of a ball. Pen, applies to this model, a slight pullback, which was subsequently replaced by a powerful breakthrough and increase in volume.