SXX cup and handle breakout

Remo,

SXX currently retreated to below breakout 25.25 is it normal to retest the breakout area on cup and handle patterns

Tight Lines

So cup and handle is king then.

Hi abudawud,

A C&H breakout (or an ascending triangle breakout or a 123-low breakout) ought to be quite powerful since it's really a break above the top of a wave 1 if it occurs after a downtrend. That means it's the main element of a wave 3 in EWT terms.

More simply, if you think about the shape of a cup and handle, the sides get steeper nearer the rim - just look at the steepness of SXX's drop from 37p; the rise back up there ought to be similar.

Incidentally, IF SXX does get to 37p again, then the whole move from 37p down to 12.5p and back to 37p will just be a larger scale cup so we might then expect a retrace in the form of another, larger handle. As we'd expect on a breakout of an all-time high, if and when SXX ever breaks through the larger C&H pattern it should gain real strength so that should also be a powerful breakout with a target in the region of 62p.

That's all speculative of course, but I hope that answers your question.

Or is the cup and handle breakout more powerful then all these other signals?

Hi guys,

I too have been waiting for what seems an eternity for this to close above 25 and now that it looks like it may do I have my doubts as to whether to trade it for the following reasons

Looking at the candlestick pattern it would seem to be a hanging man if it closed where it is now.
and on the daily the rsi looks to be in overbought territory.

If I then look at the hourly on the macd histogram there is a divergence with the price action and the same with RSI and CMF indicators.

What do you guys think?

Hi ftse80,

Yes, that sounds OK to me for a tight stop once it's closed above 25.25p.