Cup and Handle Patterns
What’s up, VWAPians!
The Fractal Assassin, 8-Baller here….
If you’re not a part of our Warlock’s World community, you missed a crucial Daily Decode yesterday.
Let me break it down for you really quick.
Yesterday, Longeveron (LGVN) had a massive run up in the first half of the day.
We traded this last week in Warlock’s World, where I dropped one of my favorite lines.
DON’T SHORT CANCER STOCKS.
It’s bad karma. And look what happened to the shorts yesterday. They were in trouble.
If you know me in Warlock’s World or from my appearances on Money Morning LIVE, you know that while of course I can trade VWAP better than (almost) EVERYONE, I am a time continuity trader.
What does this mean?
It means that I’m constantly looking at multiple time frames in addition to the intraday charts to plot out my trades.
Specifically, I like looking at the 1-year, 1-day chart aka “the daily”.
Daily charts help me to determine trends over a longer time frame, spot areas of support and resistance, and find potential gaps that can get filled.
It’s also proven to be incredibly useful for me when trading based on fractals.
As VWAPians, the Warlock teaches that we don’t trade stocks, we trade the setups.
On a longer term basis, one helpful setup to be aware of is the cup and handle formation.
A cup and handle is a technical chart pattern that resembles a cup and handle where the cup is in the shape of a “u” and the handle has a slight downward drift.
Recently, we saw a cup and handle formation on one of the Warlock’s favorites, Peabody Energy (BTU).
Cup and handle on the daily chart (right side)
The cup and handle could be considered a long term distant relative to the Kardashian bottom formation.
Once the stock’s share price rises above the previous high set by the left hand side of the “cup”, the tendency on cup and handle breaks are 100% to 200% gains.
Like I often say: TRADING IS ANTICIPATION. ANTICIPATION IS TRADING.
That being said, check out this chart from LGVN, with the daily on the right hand side.
Cup and handle forming on LGVN daily chart
DO YOU SEE IT?
To me, there appears to be a cup and handle forming on the LGVN daily chart.
If the stock’s price level were to rise above the roughly $15.50 level, or where my red “X” is, I’ll be looking for further upside.
I pointed this out to Warlock’s World members not to point out a potential trade…
But to educate the community on a popular chart pattern, so they can recognize it for themselves in the future.
Yes, in Warlock’s World, we trade intraday using VWAP.
But that doesn’t mean that you don’t PAY ATTENTION.
This is work.
And the best way to be prepared to put in the right kind of work is in Warlock’s World.
You want to learn?
GET IN HERE.
Kenny “The Warlock” Glick
April 06 2022
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