Is there a name for this pattern?

[JumpOff]

I've looked in a few different books about charting and TA, and can't really make any of those labels fit this pattern, although I see it happen pretty regularly in the EUR/USD. Todays pattern was down, but of course I often see it going the other way too...

The upper and lower bounds of the price action generally follow a path similar to the 2 blue arcs I've drawn on the chart - I know some of the price isn't completely contained in those arcs, but hey - I'm not an artist....you get the idea..

Is there a name for this? It most often comes after a breakout, and the first part along the left edge of the chart is often much steeper than today's example, and it most often just loses steam and enters a sideways channel about 8-15 pips wide....

Today's action came after a reversal and instead of going sideways ,continued to make a rounded bottom and the price retraced nearly to place it was when the reversal occurred.

Thanks,
JO.

 

[trendie]

the nearest pattern that I can make out is a "cup and handle".

 

[trendie]

http://www.investopedia.com/terms/c/cupandhandle.asp

hope this helps.

 

[tradesmart]

Cup maybe, but no handle yet......!?

It's a 'rolling bottom' imho - sometimes mentioned on ChartMans Dow threads......

(the opposite of a 'rolling top'.......... )

 

[trendie]

TS,

I stand corrected. Havent heard of a rolling bottom or top !

 

[JumpOff]

Thanks folks. Look what's developing. .. It sure looks like a cup and handle...
JO

 

[options]

I would just call it a sideways market. while it caught it's breath and decided which way next.

Forever a fan of K.I.S.S. me

 

[a320]

Jiler seems to call it a saucer bottem.....

 

[maxpain]

I would call it a cup with a bullish handle under construction (descending triangle under construction?). 1.2785 should be a bottom before it turns up towards 1.30

 

[Roberto]

You are both right, IMHO: it's a saucer bottom with a bullish handle

 

[JumpOff]

MaxPain - So far, so good....How did you come up with those numbers?
JO

 

[JumpOff]

Well, this doesn't quite fit the classic example of a cup and saucer pattern anymore. I read the link trendie provided, and it doesn't show a pullback like the one on this chart (nearly back down to the same level as the bottom of the cup). I'm thinking that options called it correctly - just a sideways market. Butting up against long term resistance, just a wait and see kind of time...

Thanks to all who took the time to look and participate. I'll post another example of the curved pattern I'm wonderingabout the next time I see a better example.
JO

 

[JumpOff]

Ok - Today we had a better example of the pattern I was talking about before we digressed into cup and handles.. This pattern is often preceded by a really long bar (I marked it in red in this example), well it looks like a really long 5 minute bar, but the interesting thing is it only takes about 30 seconds to make those highs and lows.

The blue lines don't mean anything - they are just my perception of the way this price action usual develops..

The most common thing I see happen after this pattern is a quiet drift to the side (or maybe a slow drifting retracement of about 1/4 or 1/5 the total move.) Its as though all the energy is spent.

The first image is the 5 minute chart. The second image is the 1 hour chart (for some perspective). I've outlined the area with a heavy pink box. Also, looking back with hindsight, I notice that this move was well under way before it broke through that pink trendline.

So - does it have a name, and are there any high probability entry points if you see this pattern in progress but weren't there for the entry?

Or am I better off just waiting for the next opportunity? Seems a shame to let all those lovely points go into someone else's pocket...

Thanks,
JO

 

[options]

Hi JumpOff.

That Quick red bar you mention will happen a lot in that type of market. A sideways trend.
All it means is simply that the market is taking out the orders placed top and bottom of the channel. A big move normally follows. Or you will get a fake of the market say up out of the trend to run all the stops, Then drop like a stone to swell the coffers of the astute.

Is that quick red bar tradeable?

Yes, if your on the ball and you don't get attached to the trade right from the start.

That pattern you see afterwards that you can't find in the books?

Why not name it yourself? Make a name for yourself. Bollinger, Elliott, Wilder etc all did.
You even have the ideal name.

Call it something like 'The JumpOff curve."

Odds are though that someone has written about it before

Anyway, learn how to trade that particular move, and make your dosh/mark.

Me? I'd just call it a break out move and follow it. Don't know which way it's going to go. Mmmmn, that's the problem.

Solution: have orders placed above and below to catch the run. I mean they have already run all the stops. They wouldn't do it again would they?


Seriously. Watch that move and learn how to trade it. Get it right 60% even 35% of the time and your laughing.

All the best.

 

[TRADERguy]

When I first started all I would trade was this pattern and it's opposite (a trend day up). Both are usually caused by an event (like today's oil price drop after the oil supply number) but can also start at the beginning of a trading session--usually the European open but sometimes NY. The pattern has a particularly good risk to reward ratio because it's a large move and you know where you're wrong-- the other side of the range before the break out.

Cheers,

TRADERguy

 

[JumpOff]

Your admonishment to know when the reports are being released is good advice.

I'm not trading with real money yet, just dabbling my toe in the water with a simulator until I can understand which end is up. I assumed that an "event" had taken place, but didn't really care what it was at this stage of my learning cycle.. Some events like non farm payroll, federal interest rate announcements etc can be known in advance. - If it's a published event, and I've got skin in the game, I'll be on the sidelines.

I expect events happen at unexpected times too, hence my question about high probability entry points if you missed the beginning of the move, or perhaps were stopped out during the inital phase......

I'm not expecting any trade secrets to be revealed, just wondering if this is something "everyone already knows" but me. - lol

JO

 

[JumpOff]

u MUST understand that everything has value. this perceived value changes when there is a change in events - in other words price changes with changes with news and other market events. if u fail to grasp the basics of why and how price moves then you will be killed.

so u must know when there are potentially market moving events on the horizon - especially if daytrading.

I hope you'll expand upon this a bit more. The second part of the above statement makes complete sense to me.

I'm sorry to say that I don't understand the first part. I thought the whole point of technical analysis was that:

• the price already reflects what the collective market believes about the news.
• the big institutional players have access to "fresher, more accurate" news than me
• It doesn't matter where I think the price should be, I must respond to price action.

at least u know u dont know 'which way is up' yet. this is a better start than u think.

Ha! - So far that's the only thing I'm sure of... Today the EUR/USD moved 100 pips while I kept looking for entry point to sell. So I'm sitting here asking myself, "what part of UP! do I not understand?" It's still going up, I'm still sitting here on the sidelines because I can't get my brain around the reality of it. I just keep repeating to my self, "preservation of capital - don't enter if you don't know why."

JO
You can't rollerskate in a buffalo herd.

 

[frugi]

JumpOff I have the same problem with entries in a trending market. By the time the trend is obvious, assuming I've missed its start, I wonder if it is too late to enter, only for it to continue. In this situation I wonder if the 'Holy Grail' would help. One enters on pullbacks to the 20EMA as long as ADX is above 30, and preferably rising. The target is the previous low, for downtrends, or the previous high, for uptrends. The stop can be placed a few ticks away as a strong move thru the 20EMA can indicate a trend reversal.

Yesterday's EUR was a bit mean as it gave only one decent pullback entry after a savage plunge down so the meat of the move had already been missed. So ideally one would have initially entered on the support/neckline break and aim to bank profit or trail when the H&S target was met. Then one could re-enter or add on the Holy Grail pullback, covering at the previous low, which happened to be a 00 prime as well. In fact I'd be tempted to cover everything at 00 as it was also a double bottom.

There was a similar break of support today, but if you missed that and tried a Holy Grail entry later at 1.2685ish (5 min futs chart on the right), it would have led to a loss. However, one might have avoided the HG entry this time because of the preceding price action and bigger picture. Look at that red candle with the huge tail! Serious bull power chases the price right back up to the support break target around 1.2670. A few bars later there is another hammer bouncing right off half prime 1.2650. The bulls don't want to let control slip. A glance at the 60 min and daily chart tell you why - strong support from the top of an extremely well established upchannel on the 60 min, from which we broke out 4 days ago. Also the 200 hour EMA and the daily 10 EMA. Also a half prime 1.2650 (cash). So having seen that I'd be reluctant to enter a Holy Grail short around 1.2685, but if I had it would have cost 10 or so pips, perhaps less. In fact once two bars had closed above the 20EMA a long was tempting with a stop 5-10 ticks below the EMA.

Easy in hindsight I know, as thirteen may point out

 

[JumpOff]

Frugi,
Thanks for your detailed post. I will examine it thoroughly to see if I can understand and let you know my thoughts. I may not reply for several days as "relatives are coming to visit, hooray!" and I don't expect to have any quiet time at my computer while they are here.

I love these people, but I am beginning to believe that I am a galactic orphan from some other planet- dropped into this family with this worldview just to amuse the gods.....
JO

 

[maxpain]

MaxPain - So far, so good....How did you come up with those numbers?
JO

I personally don´t like doing this in a 5min chart. Longer chart combined with a shorter is OK. I only expected a certain trading pattern to follow the cup and tried to find possible levels for it to trade. Maybe just good luck but history tends to repete itself when it comes to patterns.