CAT - Cup and handle formation 05.10.18

Caterpillar Inc, which is a manufacturer of construction and mining equipment is very close to a breakout on a Cup and Handle formation (see image).

A ‘Cup and handle’ is a price pattern whereby the cup is in the shape of a ‘U’ and the handle has as slight downward drift. Once the pattern is formed, we should expect the prices to rise going forward.

For such a trade, stop losses are normally placed below the handle or below the cup deepening the traders risk tolerance and market volatility.

What are your thoughts?

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