CNC's powerful chart: a perfect " cup and handle " forming
Well, I'm afraid there are few minor flaws. First of all, the cup-and-handle formation is supposed to occur after a rally, so that the left "rim" of the cup represent some form of high-water mark. But for the sake of arguement let's call the bounce from 12 to 15 in mid-March the "rally" and move on.
Another deficiency in CNC's cup-and-handle stems from the fact that the "correction", the cup portion of the formation, is supposed to be on lower volume than the rally which preceded it. Well, rally or no rally, the volume clearly increased, not decreased, as we went through the "cup" part of the formation.
One more flaw would be that, in the classic cup-and-handle formation, the right "rim" of the cup would represent a return to the old high. Following the charitable assumption from the first paragraph that 15 represented the "high" for C&H purposes, we note that the right-side rally fell rather short of that old high.
As for the last characteristic, the handle remaining close to the resistance level for a period of time in decreasing volume, it's still a bit too soon to tell on that point.
But other than that, good point. |
