The Bowl shape on Forex

The Bowl shape on Forex

The Bowl shape on Forex

The more a trader knows about the graphical models that indicate the continuation of the trend and its reversal, the more effective his trading is. It is important to understand that trend patterns can be simple (pennant, flag) and more complex. Just in time for the last attribute the figure of the “Cup” with a handle. Many people used to call it nothing but “Mug".
Little history

This formation was discovered by successful trader William o'neill. Note that this bullish formation during its appearance on the chart is very similar to a small Cup with a small handle.

According to o'neill, a well-formed figure is a “Bowl” Forex trading takes about 7-8 weeks. It is found on the daily and weekly charts. For clarity, to understand what this technical analysis figure looks like, we decided to show you its model schematically:
As you probably already guessed, in the place where the solid curve turns into a dotted line, you should open a long position. Thus, the " Bowl” figure is a bullish model. By the way, she likes to often appear on the shares of large companies.

Let's go back to our screenshot. If you look at it through the eyes of a novice trader, it seems quite difficult to understand. But the main thing is to correctly plot the resistance level on the chart. Since the decision to enter the market will be made on it.

If you do not take into account the first point from which you need to draw a straight line, the asset price will touch the resistance zone only once. Then you can observe a second touch or break, which will help you determine that this is the "Bowl" shape. Knowing this, the trader considers opening a BUY trade order.

So, what signals the formation of a ”circle " on Forex. You need to enter the market when, for example, the stock shows an upward movement. Then there is a prolonged flat with minor attempts to resume the bullish mood. However, those who are focused on purchases are not yet ready to take the initiative. Therefore, the asset price again rolls back from the resistance zone, thus forming the handle of the “Bowl " figure. However, its formation is much faster than the Cup itself.

Important: professional Forex market participants recommend looking for these bullish patterns on the H1-D1 timeframes. After all, there is a Golden rule for each pattern, and they work best on longer time intervals.

If we consider the figure of the “Bowl” Forex trading on the lower timeframes of one hour, there is a high probability about the formation of this pattern. In addition, on small timeframes, the profit will be insignificant. You can expect a good profit on a long-term contract. But this will require good patience. After all, it may take up to 30 days to form a single handle of the “Bowl” shape.
How to trade the " Bowl” shape with a handle?
This question is of interest to every financial market participant who has become familiar with the "Cup and handle" pattern. To do this, you need to select a stock (since it is on the shares of companies that they are formed most often), then set the daily timeframe.

By the way, a trader who is looking for a “Bowl” figure on Forex has a problem. It is not possible to track this pattern at the early stages of its formation. So, it will be quite difficult to choose a promotion.

It can be noticed only when the bowl has already formed, showing the 2nd maximum. If you connect it to the first one, we get a resistance line. This will be our signal area.
A position is opened when the price forms a handle and then comes close to the resistance line. When a breakout occurs, open a long position.
As a supplement

For stronger signals, consider trading on the “Bowl " pattern” Forex, a trader can pay attention to volumes. During the breakout of the resistance, market volumes should increase significantly. This will serve as an additional signal to get into the “longs".

If a trader considers this pattern on older time periods, it is worth paying attention to fundamental analysis (macroeconomic events). By the way, the same prolonged flat that forms the “Bowl” figure may occur due to the expectation of some important macroeconomic news (the interest rate announced by the fed, the unemployment rate, the presidential election, etc.).

While the resistance level will be broken, and this moment will coincide with the day when this or that important economic news should be released, a significant event can be considered its consequence. This is an irrefutable fact, if only because most of the different patterns in older time periods are formed due to the release of macroeconomic events.

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