A BIG CUP
Everyone who has spent more than 10 mins learning about reading price charts knows the classic cup and handle pattern. Matter of fact, the cup and handle might be one of the most stamped and respected patterns in all of finance. In stocks with good liquidity, the cup and handle has historically had a high continuation rate, popularizing it among many traders regardless of their preferred time frame.
What is the psychology behind it?
Glad you asked! The pattern honestly just shows a shift in market psychology and sentiment in a pretty simple way. The cup gets formed when consolidation happens and weak hands get dropped. Strong hands/believers scoop up the asset and pick it back up, rounding the shape into a curve upwards. Then, you get the handle formation, where there’s a bit of profit-taking before price clearly breaks out, showing increasing confidence and uptrend continuation. You can see this happen in several asset classes, from tech sector stocks to pure degenerate memecoins. You might see this anywhere from a daily to a monthly time frame, and sometimes even in smaller time frames (especially in memes).
While no pattern is perfect or 100% reliable, the cup and handle is one of few that are cemented as strong indicators in the markets. You might be wondering why I’m yapping about this. I haven’t even shown you what it looks like visually. Well, considering my last bullish-leaning post, I want to show you the following two charts:
You might be wondering which asset this is, and how you missed such a layup!
This is Gold.
Now you’re thinking about how similar this looks! What could it be? Surely I can’t miss the boat twice!
This is Bitcoin. Some call it digital gold.
I’ve previously said that crypto is a laggard market when it comes to following overall broad sentiment a lot of times, and this is PROBABLY the case here. The cup is formed, the handle is looking upwards, and the only thing left now on a weekly timeframe is UPPIES. I’ll say it as I said before: Quantitative Easing is happening globally.
People are fearing devaluation of fiat currency at the same time. There is a rotation into safe-haven assets like gold. For those that realize it, like Blackrock, Bitcoin can be the new safe-haven asset. Smart money is rotating early, and the potential upward move that awaits might be monumental. 100k per coin isn’t a pipe dream anymore.
