Tesla Cup and Handle

List of Important points:
1.Cup

The Cup is usually “U” shaped and may be considered as a rounding bottom with almost equal highs on either side. However, a “V” shaped cup also qualifies as a Cup and Handle pattern but the conviction is higher in “U” shaped due to the consolidation at the bottom.
2.Handle

The handle is usually the pullback from the higher end of the cup which may be rounding, triangle, or a descending channel. Usually, the pullback is about 1/3rd of the size of the prior advance.
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The smaller the pullback, the better is the strength of the formation and the higher the possibility of a breakout.
3.Volume pattern

The breakout from the handle’s resistance should be accompanied by increased volume thus confirming the same.
4.Period

The cup usually forms over a period of 1-6 months or even longer those formed in weekly and monthly charts. The handle ideally forms over a span of 1-4 weeks or even higher depending upon the time period of the cup.
5.Target

The projected target from the breakout is usually the vertical distance from the high to the bottom of the cup.
6. Stop loss

Traders may place a stop loss at the lowest point of the handle and may trail it to a recent swing low as the stock makes a higher high within the consolidation area of the handle; depending upon the risk appetite of the trader.