CHART
PATTERNS

A double top is a bearish reversal chart pattern that occurs in an uptrend and signals a potential trend reversal to the downside. It is formed by two consecutive peaks (high points) that are approximately at the same price level, separated by a temporary trough (low point) in between. The double top pattern indicates that the buying momentum has weakened, and the uptrend may be losing steam, leading to a possible reversal in the future.

Here's how a double top pattern is recognized:

1. Uptrend: The price of the underlying asset is in an uptrend, making higher highs and higher lows.

2. First Peak: The price reaches a high point (peak) and then retraces to a temporary low (trough).

3. Second Peak: The price rallies again, approaching the previous high (first peak), but fails to break above it. Instead, it retraces once more.

4. Confirmation: The double top pattern is confirmed once the price breaks below the trough (low point) that separated the two peaks. This breakdown signals a potential trend reversal, and the uptrend may be changing to a downtrend.

The double top pattern is considered significant when the price breaks below the trough, indicating that the bearish momentum has gained strength. Traders often look for increased trading volume when the breakdown occurs, adding to the pattern's reliability.

A double bottom is a bullish reversal chart pattern that occurs in a downtrend and signals a potential trend reversal to the upside. It is formed by two consecutive troughs (low points) that are approximately at the same price level, separated by a temporary peak (high point) in between. The double bottom pattern indicates that the selling pressure has weakened, and the downtrend may be losing momentum, leading to a possible reversal in the future.

Here's how a double bottom pattern is recognized:

1. Downtrend: The price of the underlying asset is in a downtrend, making lower lows and lower highs.

2. First Trough: The price reaches a low point (trough) and then retraces to a temporary high (peak).

3. Second Trough: The price declines again, approaching the previous low (first trough), but finds support and bounces back up.

4. Confirmation: The double bottom pattern is confirmed once the price breaks above the peak (high point) that separated the two troughs. This breakout signals a potential trend reversal, and the downtrend may be changing to an uptrend.

The double bottom pattern is considered significant when the price breaks above the peak, indicating that the bullish momentum has gained strength. Traders often look for increased trading volume when the breakout occurs, adding to the pattern's reliability.

A triple bottom is a bullish reversal chart pattern that occurs in a downtrend and signals a potential trend reversal to the upside. It is formed by three consecutive troughs (low points) that are approximately at the same price level, separated by temporary peaks (high points) in between. The triple bottom pattern indicates that the selling pressure has weakened, and the downtrend may be losing momentum, leading to a possible reversal in the future.

Here's how a triple bottom pattern is recognized:

1. Downtrend: The price of the underlying asset is in a downtrend, making lower lows and lower highs.

2. First Trough: The price reaches a low point (trough) and then retraces to a temporary high (peak).

3. Second Trough: After a brief rally, the price declines again, reaching a second low (trough) at or near the level of the first trough. The price then retraces once more.

4. Third Trough: The price declines again for the third time, approaching the level of the previous two troughs. It finds support and bounces back up.

5. Confirmation: The triple bottom pattern is confirmed once the price breaks above the highest peak (high point) that separated the three troughs. This breakout signals a potential trend reversal, and the downtrend may be changing to an uptrend.

The triple bottom pattern is considered significant when the price breaks above the highest peak, indicating that the bullish momentum has gained strength. Traders often look for increased trading volume when the breakout occurs, adding to the pattern's reliability.

a triple top is a bearish reversal chart pattern that occurs in an uptrend and signals a potential trend reversal to the downside. It is formed by three consecutive peaks (high points) that are approximately at the same price level, separated by temporary troughs (low points) in between. The triple top pattern indicates that the buying momentum has weakened, and the uptrend may be losing steam, leading to a possible reversal in the future.

Here's how a triple top pattern is recognized:

1. Uptrend: The price of the underlying asset is in an uptrend, making higher highs and higher lows.

2. First Peak: The price reaches a high point (peak) and then retraces to a temporary low (trough).

3. Second Peak: After a brief decline, the price rallies again, approaching the level of the first peak, but fails to break above it. Instead, it retraces once more to form a second trough.

4. Third Peak: The price rallies again for the third time, approaching the level of the previous two peaks. However, it fails to break above the resistance created by the previous peaks and declines once more.

5. Confirmation: The triple top pattern is confirmed once the price breaks below the lowest trough (low point) that separated the three peaks. This breakdown signals a potential trend reversal, and the uptrend may be changing to a downtrend.

The triple top pattern is considered significant when the price breaks below the lowest trough, indicating that the bearish momentum has gained strength. Traders often look for increased trading volume when the breakdown occurs, adding to the pattern's reliability.

A trendline is a straight line that is drawn on a price chart to visually represent the direction and slope of a trend in the price of an asset. It is one of the most basic and widely used tools in technical analysis. Trendlines are helpful in identifying the overall trend of an asset, whether it is in an uptrend (rising prices), a downtrend (falling prices), or a sideways trend (prices moving in a range).

To draw a trendline:

1. Uptrend (Rising Prices): To draw an uptrend line, connect the higher swing lows (successively higher low points) on the price chart using a straight line. Each time the price pulls back and forms a higher low, extend the line to intersect with the price action.

2. Downtrend (Falling Prices): To draw a downtrend line, connect the lower swing highs (successively lower high points) on the price chart using a straight line. Each time the price rallies and forms a lower high, extend the line to intersect with the price action.

3. Sideways Trend (Range-Bound Prices): In a sideways trend, the price moves within a trading range without showing a clear uptrend or downtrend. In this case, draw a horizontal line connecting the upper boundary (resistance) and the lower boundary (support) of the range.

Trendlines can act as dynamic support and resistance levels. In an uptrend, the trendline typically acts as a support level, where the price tends to find buying interest. In a downtrend, the trendline acts as a resistance level, where the price tends to encounter selling pressure.

Trendlines are useful for:

1. Identifying the direction of the prevailing trend.

2. Spotting potential trend reversals when a trendline is broken.

3. Providing entry and exit points for trades based on price bounces or breakouts from the trendline.

4. Confirming the strength of a trend when it is tested multiple times.

The Flag and Pole pattern, also known as the Flag pattern, is a continuation pattern in technical analysis. It is formed when there is a strong price movement in one direction (the "pole"), followed by a period of consolidation in the form of a sideways or gently sloping price range (the "flag"), and then a resumption of the initial price movement. The pattern is called a "flag" because the price consolidation resembles a flag on a flagpole.

Here's how the Flag and Pole pattern is recognized:

1. Pole Formation: The pattern starts with a sharp and significant price movement in one direction, either upward (bullish pole) or downward (bearish pole). This initial move is often caused by a sudden surge in buying or selling activity, resulting in a steep price rise or fall.

2. Flag Formation: After the strong price movement, the price enters a period of consolidation, where it moves sideways or slightly retraces. The price range of the flag is usually characterized by lower trading volume compared to the volume during the pole formation. The flag pattern is typically formed by two parallel trendlines, with the upper trendline acting as resistance and the lower trendline acting as support.

3. Breakout: The Flag and Pole pattern is confirmed when the price breaks out of the flag formation in the same direction as the initial pole movement. For example, if the initial move was bullish, the breakout from the flag would be to the upside, indicating a continuation of the uptrend.

Trading the Flag and Pole Pattern:

Traders use the Flag and Pole pattern to identify potential continuation opportunities in an existing trend. They can consider the following strategies:

1. Entry: Traders often enter the trade after the breakout occurs, confirming the continuation of the trend. They may go long (buy) on a bullish breakout or short (sell) on a bearish breakout.

2. Stop Loss: A stop-loss order is placed just below the lower trendline (for long trades) or above the upper trendline (for short trades) to protect against false breakouts.

3. Profit Target: Traders can set a profit target based on the size of the pole. They measure the length of the pole and project it from the breakout point to estimate the potential price target.

4. Volume Confirmation: Traders may look for an increase in trading volume during the breakout to confirm the validity of the pattern.

The Inverted Flag and Pole pattern, also known as the Inverted Flag pattern, is a bearish continuation pattern in technical analysis. It is the mirror image of the traditional Flag and Pole pattern, indicating a potential continuation of a downtrend after a period of consolidation.

Here's how the Inverted Flag and Pole pattern is recognized:

1. Pole Formation: The pattern starts with a sharp and significant price movement in a downward direction, forming the "bearish pole." This initial move is often caused by a sudden surge in selling activity, resulting in a steep price decline.

2. Flag Formation: After the strong price movement, the price enters a period of consolidation, where it moves sideways or slightly retraces in an upward direction. The price range of the inverted flag is usually characterized by lower trading volume compared to the volume during the pole formation. The inverted flag pattern is typically formed by two parallel trendlines, with the upper trendline acting as resistance and the lower trendline acting as support.

3. Breakdown: The Inverted Flag and Pole pattern is confirmed when the price breaks down below the lower trendline of the flag formation. This breakdown signals a continuation of the downtrend, and the price is expected to resume its downward movement.

Trading the Inverted Flag and Pole Pattern:

Traders use the Inverted Flag and Pole pattern to identify potential continuation opportunities in an existing downtrend. They can consider the following strategies:

1. Entry: Traders often enter the trade after the breakdown occurs, confirming the continuation of the downtrend. They may go short (sell) on a bearish breakdown.

2. Stop Loss: A stop-loss order is placed just above the upper trendline to protect against false breakdowns or potential reversal.

3. Profit Target: Traders can set a profit target based on the size of the pole. They measure the length of the pole and project it from the breakdown point to estimate the potential price target.

4. Volume Confirmation: Traders may look for an increase in trading volume during the breakdown to confirm the validity of the pattern.

An ascending triangle pattern is a bullish continuation pattern in technical analysis. It is formed by two trendlines—a horizontal resistance line and a rising support line. The pattern indicates that the price of an asset is likely to continue its upward trend after a period of consolidation.

Here's how the ascending triangle pattern is recognized:

1. Uptrend: Prior to the formation of the ascending triangle, there is an existing uptrend, with the price making higher highs and higher lows.

2. Horizontal Resistance: The pattern starts with a horizontal resistance line, which connects the swing highs (high points) of the price action. This level acts as a price barrier, preventing the price from moving higher in the short term.

3. Rising Support: The ascending triangle pattern forms as the price consolidates and gradually moves higher. The price forms higher swing lows (low points) connected by a rising trendline, which acts as support.

4. Convergence: As time progresses, the horizontal resistance line and the rising support line converge toward each other, forming a triangle-like pattern.

5. Breakout: The ascending triangle pattern is confirmed when the price breaks out above the horizontal resistance line. This breakout signals the continuation of the existing uptrend, and the price is expected to move higher.

Trading the Ascending Triangle Pattern:

Traders use the ascending triangle pattern to identify potential bullish continuation opportunities in an existing uptrend. They can consider the following strategies:

1. Entry: Traders often enter the trade after the price breaks out above the horizontal resistance line. They may go long (buy) on a bullish breakout.

2. Stop Loss: A stop-loss order is placed just below the rising support line to protect against potential false breakouts or a reversal.

3. Profit Target: Traders can set a profit target based on the height of the triangle. They measure the vertical distance from the base (start of the triangle) to the horizontal resistance line and project it upwards from the breakout point to estimate the potential price target.

4. Volume Confirmation: Traders may look for an increase in trading volume during the breakout to confirm the validity of the pattern.

A descending triangle pattern is a bearish continuation pattern in technical analysis. It is formed by two trendlines—a horizontal support line and a descending resistance line. The pattern indicates that the price of an asset is likely to continue its downward trend after a period of consolidation.

Here's how the descending triangle pattern is recognized:

1. Downtrend: Prior to the formation of the descending triangle, there is an existing downtrend, with the price making lower highs and lower lows.

2. Horizontal Support: The pattern starts with a horizontal support line, which connects the swing lows (low points) of the price action. This level acts as a price floor, preventing the price from moving lower in the short term.

3. Descending Resistance: The descending triangle pattern forms as the price consolidates and gradually moves lower. The price forms lower swing highs (high points) connected by a descending trendline, which acts as resistance.

4. Convergence: As time progresses, the horizontal support line and the descending resistance line converge toward each other, forming a triangle-like pattern.

5. Breakdown: The descending triangle pattern is confirmed when the price breaks down below the horizontal support line. This breakout signals the continuation of the existing downtrend, and the price is expected to move lower.

Trading the Descending Triangle Pattern:

Traders use the descending triangle pattern to identify potential bearish continuation opportunities in an existing downtrend. They can consider the following strategies:

1. Entry: Traders often enter the trade after the price breaks down below the horizontal support line. They may go short (sell) on a bearish breakdown.

2. Stop Loss: A stop-loss order is placed just above the descending resistance line to protect against potential false breakouts or a reversal.

3. Profit Target: Traders can set a profit target based on the height of the triangle. They measure the vertical distance from the base (start of the triangle) to the horizontal support line and project it downward from the breakout point to estimate the potential price target.

4. Volume Confirmation: Traders may look for an increase in trading volume during the breakdown to confirm the validity of the pattern.

The symmetrical triangle pattern, also known as the symmetrical triangle, is a neutral chart pattern in technical analysis. It is formed by two converging trendlines—an ascending support line and a descending resistance line. The pattern indicates that the price of an asset is experiencing a period of consolidation, with neither buyers nor sellers having a clear advantage. As a result, the price moves within a contracting range, forming a symmetrical triangle-like pattern.

Here's how the symmetrical triangle pattern is recognized:

1. Price Contraction: The pattern starts with a period of price contraction, where the price forms higher swing lows (low points) connected by the ascending support line and lower swing highs (high points) connected by the descending resistance line.

2. Convergence: As time progresses, the two trendlines converge toward each other, forming a symmetrical triangle with a series of higher lows and lower highs.

3. Breakout: The symmetrical triangle pattern is resolved when the price breaks out of either the ascending support line or the descending resistance line. The breakout can be either bullish or bearish, depending on the direction of the price movement.

Trading the Symmetrical Triangle Pattern:

Traders use the symmetrical triangle pattern to identify potential breakout opportunities. They can consider the following strategies:

1. Entry: Traders often enter the trade after the price breaks out of either the ascending support line (bullish breakout) or the descending resistance line (bearish breakout).

2. Direction Confirmation: To confirm the direction of the breakout, traders may look for an increase in trading volume during the breakout.

3. Stop Loss: A stop-loss order is placed on the opposite side of the breakout line to protect against potential false breakouts or a reversal.

4. Profit Target: Traders can set a profit target based on the height of the triangle. They measure the vertical distance from the base (start of the triangle) to the highest or lowest point of the breakout and project it in the direction of the breakout to estimate the potential price target.

A channel pattern, also known as a price channel or trend channel, is a chart pattern that represents the price movement of an asset between two parallel trendlines. These trendlines act as dynamic support and resistance levels, defining the boundaries within which the price moves.

There are two main types of channel patterns:

1. Ascending Channel: An ascending channel is a bullish pattern formed by two parallel trendlines, where the lower trendline is drawn through a series of higher swing lows (support) and the upper trendline is drawn through a series of higher swing highs (resistance). The price tends to move higher within the channel, indicating an uptrend.

2. Descending Channel: A descending channel is a bearish pattern formed by two parallel trendlines, where the upper trendline is drawn through a series of lower swing highs (resistance) and the lower trendline is drawn through a series of lower swing lows (support). The price tends to move lower within the channel, indicating a downtrend.

Channel patterns can provide valuable information for traders:

1. Trend Direction: Channels help identify the prevailing trend direction. In an ascending channel, the trend is bullish, and in a descending channel, the trend is bearish.

2. Entry and Exit Points: Traders can use channel patterns to determine potential entry and exit points. Buying near the lower trendline in an ascending channel or selling near the upper trendline in a descending channel are common strategies.

3. Stop Loss Placement: Traders can set stop-loss orders just outside the channel boundaries to protect against potential false breakouts.

4. Price Targets: The width of the channel can be used to estimate potential price targets. For example, in an ascending channel, traders can measure the distance between the two trendlines and project it upwards from the breakout point to estimate a potential target.

A wedge pattern is a chart pattern formed by two converging trendlines that slope in the same direction. The wedge pattern resembles a narrowing triangle and indicates a potential trend reversal or continuation, depending on its orientation and the prevailing trend.

There are two main types of wedge patterns:

1. Rising Wedge: A rising wedge is a bearish pattern formed by two upward-sloping trendlines, where the lower trendline acts as support, and the upper trendline acts as resistance. The price tends to make higher swing lows and higher swing highs within the wedge. This pattern suggests that the prevailing uptrend is losing momentum, and a potential trend reversal to the downside may occur.

2. Falling Wedge: A falling wedge is a bullish pattern formed by two downward-sloping trendlines, where the upper trendline acts as resistance, and the lower trendline acts as support. The price tends to make lower swing highs and lower swing lows within the wedge. This pattern suggests that the prevailing downtrend is losing momentum, and a potential trend reversal to the upside may occur.

Key characteristics of wedge patterns:

1. Converging Trendlines: Both trendlines within a wedge pattern converge towards each other, creating a narrowing triangle-like shape.

2. Volume: During the formation of a wedge pattern, trading volume often diminishes. This indicates that market participants are uncertain about the asset's direction.

3. Breakout: A breakout from the wedge pattern occurs when the price moves beyond one of the trendlines. The direction of the breakout (upward for falling wedge or downward for rising wedge) provides a potential trading signal.

Trading the Wedge Pattern:

Traders can use the wedge pattern to identify potential trading opportunities:

1. Entry: Traders may enter a trade after the price breaks out of the wedge pattern. For a rising wedge, a bearish breakout may trigger a short-selling opportunity, while a bullish breakout in a falling wedge may signal a long-buying opportunity.

2. Stop Loss: A stop-loss order is placed on the opposite side of the breakout line to protect against potential false breakouts.

3. Profit Target: Traders can set a profit target based on the height of the wedge pattern. They measure the vertical distance from the start of the wedge to the breakout point and project it in the direction of the breakout to estimate the potential price target.

A rectangle pattern is a chart pattern that represents a period of consolidation or indecision in the price movement of an asset. The rectangle pattern is formed by two horizontal trendlines—a support line at the bottom and a resistance line at the top. These trendlines create a rectangular or box-like shape on the price chart.

The rectangle pattern indicates that the price is trading within a relatively narrow range, moving sideways between the support and resistance levels. This suggests that neither buyers nor sellers have a clear advantage, leading to a period of consolidation.

There are two main types of rectangle patterns:

1. Rectangle Bottom (Bullish): The rectangle bottom pattern forms after a downtrend and indicates a potential bullish reversal. The price moves within the rectangle, and when it breaks out above the upper resistance line, it signals a potential trend reversal to the upside.

2. Rectangle Top (Bearish): The rectangle top pattern forms after an uptrend and indicates a potential bearish reversal. The price moves within the rectangle, and when it breaks out below the lower support line, it signals a potential trend reversal to the downside.

Key characteristics of the rectangle pattern:

1. Sideways Movement: The price moves horizontally within the rectangle, indicating a period of consolidation.

2. Well-Defined Boundaries: The support and resistance lines form well-defined horizontal levels, acting as barriers for the price movement.

3. Volume: During the formation of the rectangle pattern, trading volume often diminishes. This suggests a lack of strong buying or selling pressure.

Trading the Rectangle Pattern:

Traders can use the rectangle pattern to identify potential trading opportunities:

1. Entry: Traders may enter a trade after the price breaks out above the upper resistance line in a rectangle bottom pattern (bullish breakout) or below the lower support line in a rectangle top pattern (bearish breakout).

2. Stop Loss: A stop-loss order is placed on the opposite side of the breakout line to protect against potential false breakouts.

3. Profit Target: Traders can set a profit target based on the height of the rectangle pattern. They measure the vertical distance from the support to the resistance line and project it in the direction of the breakout to estimate the potential price target.

The Head and Shoulders pattern is a popular chart pattern in technical analysis that signals a potential trend reversal from bullish to bearish. It is considered one of the most reliable and widely recognized reversal patterns.

The Head and Shoulders pattern is formed by three consecutive peaks (high points) on the price chart, with the center peak (the "head") being higher than the two surrounding peaks (the "shoulders"). The pattern is named after its resemblance to a head with two shoulders on each side.

Here's how the Head and Shoulders pattern is recognized:

1. Left Shoulder: The pattern starts with an uptrend, and the first peak (left shoulder) is formed when the price reaches a high point, followed by a temporary decline.

2. Head: After the left shoulder, the price continues to rise and forms a higher peak (the head), which is the highest point in the pattern. The head is typically higher than the left shoulder and the right shoulder.

3. Right Shoulder: After the head, the price retraces once more and forms the right shoulder, which is another peak that is similar in height to the left shoulder.

4. Neckline: The pattern's support level is called the neckline, and it is drawn by connecting the lows of the two troughs that separate the three peaks. The neckline can be horizontal, ascending, or descending.

Trading the Head and Shoulders Pattern:

The Head and Shoulders pattern is a bearish reversal pattern, and traders use it to identify potential opportunities to go short (sell) after the pattern is confirmed. Here's how traders approach trading the pattern:

1. Entry: Traders may enter a short trade once the price breaks below the neckline. This breakdown signals a potential trend reversal, and the price is expected to move lower.

2. Stop Loss: A stop-loss order is placed just above the neckline to protect against potential false breakouts or a reversal.

3. Profit Target: Traders can set a profit target based on the pattern's height. They measure the vertical distance from the head to the neckline and project it downward from the neckline to estimate the potential price target.

4. Volume Confirmation: Traders may look for an increase in trading volume during the breakdown to confirm the validity of the pattern.

The Inverse Head and Shoulders pattern, also known as the Head and Shoulders Bottom, is a bullish reversal pattern in technical analysis. It is the mirror image of the traditional Head and Shoulders pattern, indicating a potential trend reversal from bearish to bullish.

The Inverse Head and Shoulders pattern is formed by three consecutive troughs (low points) on the price chart, with the center trough (the "head") being lower than the two surrounding troughs (the "shoulders"). The pattern is named after its resemblance to a head with two shoulders on each side, but in this case, it appears upside down.

Here's how the Inverse Head and Shoulders pattern is recognized:

1. Left Shoulder: The pattern starts with a downtrend, and the first trough (left shoulder) is formed when the price reaches a low point, followed by a temporary rally.

2. Head: After the left shoulder, the price continues to decline and forms a lower trough (the head), which is the lowest point in the pattern. The head is typically lower than the left shoulder and the right shoulder.

3. Right Shoulder: After the head, the price rallies again and forms the right shoulder, which is another trough that is similar in depth to the left shoulder.

4. Neckline: The pattern's resistance level is called the neckline, and it is drawn by connecting the highs of the two peaks that separate the three troughs. The neckline can be horizontal, ascending, or descending.

Trading the Inverse Head and Shoulders Pattern:

The Inverse Head and Shoulders pattern is a bullish reversal pattern, and traders use it to identify potential opportunities to go long (buy) after the pattern is confirmed. Here's how traders approach trading the pattern:

1. Entry: Traders may enter a long trade once the price breaks above the neckline. This breakout signals a potential trend reversal, and the price is expected to move higher.

2. Stop Loss: A stop-loss order is placed just below the neckline to protect against potential false breakouts or a reversal.

3. Profit Target: Traders can set a profit target based on the pattern's height. They measure the vertical distance from the head to the neckline and project it upward from the neckline to estimate the potential price target.

4. Volume Confirmation: Traders may look for an increase in trading volume during the breakout to confirm the validity of the pattern.

The Cup and Handle pattern is a bullish continuation pattern in technical analysis. It is considered one of the most reliable and widely recognized bullish chart patterns. The pattern resembles a teacup with a handle, hence its name.

The Cup and Handle pattern consists of two main parts:

1. Cup: The first part of the pattern is the "cup." It is formed by a rounded bottom, resembling a "U" shape on the price chart. The cup represents a period of consolidation and indicates that the price has experienced a significant downtrend before forming the rounded bottom.

2. Handle: The second part of the pattern is the "handle." It is formed by a short-term price consolidation, typically a downward-sloping price movement after the completion of the cup. The handle retraces a portion of the cup's advance before the pattern continues its upward movement.

Key characteristics of the Cup and Handle pattern:

1. Rounded Bottom: The cup part of the pattern should have a smooth, rounded bottom, without sharp or sudden movements.

2. Symmetry: The two sides of the cup should be roughly symmetrical in shape.

3. Depth: The depth of the cup should not be too shallow, indicating a significant downtrend before the pattern forms.

4. Handle Length: The handle should be relatively short in comparison to the cup, typically representing a retracement of about one-third to one-half of the cup's advance.

Trading the Cup and Handle Pattern:

Traders use the Cup and Handle pattern to identify potential bullish continuation opportunities. Here's how traders approach trading the pattern:

1. Entry: Traders may enter a long trade once the price breaks out above the handle's resistance level. The breakout signals the continuation of the uptrend.

2. Stop Loss: A stop-loss order is placed just below the handle's support level to protect against potential false breakouts or a reversal.

3. Profit Target: Traders can set a profit target based on the pattern's height. They measure the vertical distance from the cup's bottom to the handle's resistance and project it upward from the breakout point to estimate the potential price target.

4. Volume Confirmation: Traders may look for an increase in trading volume during the breakout to confirm the validity of the pattern.