"Trading Rectangle Channel Patterns"
by Suri Duddella

ModernTrader (June. 2017)

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  Developing SPX Cup and Handle Pattern     7/03/2016 8.45am

HS HS Developing SPX Cup and Handle Pattern

Cup and Handle patterns are continuation patterns and usually formed in bullish markets. Most Cup and Handle patterns are very reliable and offer great trading opportunities. “Cup” formation is developed during price rallies from the round bottom over multiple months. The “Handle” part forms due to a price consolidation/correction after “Cup” formation and before a clear breakout to the upside. The Handle depth is about 20-50% of the Cup depth.

SPX formed a Cup & Handle pattern since Nov. 2015 with a Cup high of 2116 (Nov. 2015) and Cup low of 1810 (Feb. 2016). On Apr. 20, 2016, SPX completed Cup formation as it traded near Nov.15's high (2111). On May 19, 2016, SPX bounced off 200 SMA at 2025.91 to form a Handle bottom. SPX made a new high at 2120 (June 8, 2016) to close above the Nov. 2015 Cup high (2116) as a new breakout level. However, price did not follow through and fell back into the trading range on BREXIT fears. Since June 8, 2016, SPX formed a new Handle (low of 1991, a retracement of 42% of the Cup Depth). If SPX rallies from current level (as of July 3, 2016) and breaks above 2120.55 level it will confirm Cup and Handle Pattern. This may signal higher prices in the coming months.

If SPX breaksout above 2120 level, SPX targets would be 2232 (38%), 2305-2357 (62-79%).





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