Cup & Handle pattern
10/07/2023, 12.16 PM IST
|| द्यूतं छलयतामस्मि तेजस्तेजस्विनामहम् ।| भावार्थ : मैं छल करने वालों में जूआ और प्रभावशाली पुरुषों का प्रभाव हूँ । श्रीमद्भगवद्गीता >अथ दशमोऽध्याय:- विभूतियोग
Cup & Handle pattern
10/07/2023, 12.16 PM IST
4th July 2023,
The Three Gaps Up pattern plays out over four or more days, and the signal is quite unique in its flexibility, as the three gaps do not need to be consecutive. If you believe that you have spotted the Three Gaps Up pattern, look for the following criteria:
First, a well-defined upward trend must be in progress. Second, there must be three gaps (hence the name) within the uptrend. A gap, by the way, is an unfilled space or interval between the bodies of two candlesticks, and it indicates that no trading has occurred during that window of time.
That’s it! That’s all there is to it. Ideally, however, the gaps will be close together and the candles will all be white. The image above shows a lovely example in which the three gaps are consecutive and all four candles are bullish.
Like many candlestick patterns, the Three Gaps Up has a similar but opposing brother: the Three Gaps Down candlestick pattern. Both signals contain at least four candles and three gaps and herald a change in trend, but the Three Gaps Down signal moves downward while the Three Gaps Up signal moves (you guessed it!) upward.
So what does this all mean? Well, for three days the bulls are in control, and the price flies upward, gapping between sessions. The market is overbought, and exhaustion is inevitable. After all that climbing, the market will likely reverse, allowing the bears to take the reins. Thus, when you have spotted all three gaps, you can safely assume that a reversal is on the horizon.
To improve the Three Gaps Up pattern’s reliability, don’t rely solely on it. Instead, combine it with other technical indicators that point to the same conclusion. RSI diversion can be used .
Finally, any trader worth his or her salt knows how crucial it is to check for confirmation before pressing onward. So if you spot the Three Gaps Up pattern, look for the price to fall, reaching at least the midpoint of the last white body, to confirm the trend’s reversal. If it fills the last gap, you can be certain a reversal has occurred. Jay Shriram.
I wrote a shlok ( line ) from hindu holy book "Geeta" below the name of my blog which is in Sanskrit language. That line defines the difference between trading & speculation.
Generally majority
Now question arises ... how can we shift from speculation to trading ? You can't become a trader until you left the habit of taking separate trades & expecting profits from each & every trade. H.H.Lord.Krishna said," who play's for win will get win & failure both". This is inevitable.
Algorithm is answer to this problem. Choose any chart pattern or indicator or combination of indicators you like. Study deeply about their success ratios. You can get more loss making trades than profitable trades in a whole year but calculate profit & loss also. If your signal system is not bad then you can see good profit at the end of the year. Profit making trades are big and loss making trades are little. Apply that set up on chart & do backtesting manually on charts . Multi-year manual backtesting is essential. It can take 2 to 3 months of hard work but it will make you sure about earning money. Never use computerised system for backtesting. Each & every trade should be taken.
Now you are trading not for winning the trade but because there is a signal to enter the particular trade & you have to follow orders of that signal. You expect nothing ( profit / loss ) from that particular trade. You are sure about your profit at the end of the year or 6 months etc. Now you are doing long short long short in same instrument in same quantity with good funds for loss. This is trading.
There is very thin wall between trading & speculation. Hope you can understand this article. There is lot to say but I think that ... readers want tips, calls etc. They will not like such basics.