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Strategies & Market Trends : Investor's Business Daily
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To: Investor2 who wrote (108)8/27/2000 1:48:56 AM
From: adairm  Read Replies (1) of 164
 
I2: I think I understand what I think you said! The handle is formed when the folks that bought at or near the old high sell in order to break even. These are the weak hands holding the stock that must be shook out before the stock will advance to new highs.

There can be 'high handles' or 'low handles', not just those formed right at the old high. In fact, the pivot point is 1/8 point over the intraday high of the beginning of the handle. Note that the stock does not necessarily have to be making new highs to achieve this. (But it should be real close!)

Now sometimes a pattern may trace many attempts to break out. It rises to the pivot point, and makes a smaller handle. If it does this 2 or 3 or even 4 times, that's great! Why? Because when the breakout does come, it will be even more powerful! It's like a coil being compressed tighter and tighter.

A great way to spot these is by using Bollinger Bands. When the bands pinch real close together, a breakout (one way or another)is going to happen soon.

Adairm
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