In 2019, I followed the bullish market and gambled on altcoins, and by 2021, I was wiped out by leveraged liquidation, owing millions at my lowest point, calculating even the cost of a taxi. During that time, I sifted through all technical indicators, stayed up late watching the market chasing rises and falls, and the harder I worked, the more I lost. Until I gave up on 'complexity' and returned to simplicity—a 'cup and handle' pattern that countless people ignore became my only weapon for recovery.
1. What is a cup handle? The 'mirror' of the main force's washout
The essence of the cup and handle pattern is to see through the trajectory of the main force's capital accumulation and market shaking.
Correct cup handle (upside down):
Before the market starts, the main force will first gently suppress prices to form a bowl-shaped 'cup body' (U-shaped bottom), absorbing enough chips before making a small pullback to form the 'cup handle', and finally wash out retail investors.
Key signal: if the trading volume at the end of the cup handle shrinks to a low volume, and suddenly expands when breaking through the neck line (at least 150% of the average volume of the cup body), that is the moment the charge is sounded.
Case study: In October 2023, SOL formed a cup handle around $22, breaking through $25 and rising to $35, with a gain of 60%.
Inverted cup handle (top facing up):
The trap of the main force pushing prices up. After a price surge, a pullback forms an 'inverted cup body', and a weak rebound forms an 'inverted cup handle'. It looks like it will continue to rise, but in reality, it's an opportunity to escape.
My lesson: During the dogecoin surge in 2021, I did not recognize the inverted cup handle, and after chasing the high, I got stuck at the peak.
Two, why do 90% of people not use the cup handle well?
Died from 'false breakout'.
After the cup handle breaks out, if the trading volume does not increase (below 30% of the average volume of the cup body), it may be a false signal. I once rushed in out of impatience and ended up getting stopped out by a spike. Later, I set a strict rule: after breaking through the neck line, wait for a 4-hour K-line closing price confirmation before entering.
Fell due to 'unstable emotions'.
The cup handle's oscillation period is often accompanied by market washing, and prices will rub back and forth. Many people cannot withstand the fear and sell at the handle. My coping method is: if the handle pullback does not exceed 12% of the cup body height, hold on tightly; if the volume breaks down, stop loss immediately.
The mistake is in 'blindly copying'.
The cup handle cycle needs to be flexibly adjusted. The A-share market commonly uses 15-25 weeks, but due to large fluctuations in the cryptocurrency market, I compress it to 4-8 weeks. The key is that the cup body pullback does not exceed 35%, otherwise the pattern becomes invalid.
Three, my practical mindset: turn the cup handle into a 'cash machine'.
Triple verification, refuse to gamble on luck.
Pattern confirmation: the cup body is smooth like a U (V-shaped cups have a high failure rate), with a handle pullback of 8%-12%.
Volume coordination: the daily trading volume must increase by more than 50%, and large on-chain transfers must also increase simultaneously (using Bitpie to monitor whale wallets).
Market resonance: when the correlation between Bitcoin and the Nasdaq index is >0.7, the win rate of the cup handle increases by 30% (as in October 2023).
Position management: a small knife saws a big tree.
The trial and error position should not exceed 5% of capital, and increase to 20% after confirming the breakout.
Set the stop loss 3% below the low point of the handle, and activate a trailing stop profit after a 20% profit (refer to the 10-day moving average).
Counterintuitive operation: others panic while I lie in wait.
In March 2024, BTC plummeted due to fake ETF news. I accumulated at the cup handle position ($60,000), then it rose to $72,000 for profit-taking. The value of the cup handle is that it gives you the courage to 'get on board at a low position' when the public hesitates.
Four, the awakening beyond the cup handle: trading is about cultivating the mind.
No matter how precise the cup handle is, it is just a tool. What truly allows me to have stable profits is three years of consistently writing trading diaries:
Record the emotions during each trade (such as 'FOMO chasing highs' and 'panic selling');
Review why I missed the cup handle (such as taking profits too early or not daring to increase positions during breakouts).
Now, I still lose money, but the loss per trade never exceeds 2% of my capital. The biggest gain in the cryptocurrency world is not the myth of getting rich overnight, but surviving to the next bull market.
The cup handle pattern is not a money printing machine, but a manifestation of 'rules'. It has taught me to wait:
"When the main force is washing the market, I observe. When the breakout signal appears, I pull the trigger. When the trend ends, I exit."
In the current market, institutional funds are diverging around $70,000 for BTC, but on-chain data shows that whale wallets are still accumulating. The next cup handle may be brewing.
Remember: the market never sleeps, but your discipline can let you have a good night's sleep. Follow Ake to learn more first-hand information and precise points about cryptocurrency, becoming your guide in the crypto world; learning is your greatest wealth!
