Investing for Organizational Sustainability

wall street survivor • investing 101
chart patterns, volume numbers and gaps in the buying or selling trends.
From this, you may also want to consider what might follow in the future
from what the stock charts show.chapter eight
3. What is the Cup-with-Handle pattern?
b. A price fall that bottoms out and rises again.
The Cup-with-Handle pattern is one of the most well known stock
patterns. It appears to look like an inverted semi-circle. The shape reflects
that the stock price has fallen, bottomed out, and then started to rise
again. The cup develops first followed by the handle. If the price goes
beyond the upper, right side of the cup, then the pattern is confirmed.
4. When should you buy a stock in the Cup-with-Handle pattern?
a. After the handle is formed and price begins to rise.
While the bottom of the cup formation would be ideal since the price
could be the lowest, there is risk to consider. That’s why experts suggest
buying after the handle begins to ascend as this is where the breakout
can occur, leading to greater potential profit from the investment. Pay
attention to the depth of the cup on the right side of the pattern as this is
a sign that a potential price increase will occur.
5. What is a Head and Shoulders pattern?
c. A bearish signal that prices will fall after the pattern formation is
done.
While all stock patterns may seem to follow this up and down pattern,
the real ones are tough to identify. The left shoulders come from high
volume numbers followed by a market reaction where price decreases
and the volume goes down. This continues until another head is
completed followed by another lower volume period to complete the
shoulders.
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