Educational: How to calculate target profit from a cup and handle pattern - case study on AAPL stock

This is an educational piece. When it comes to stock investment, I always keep an eye out for the cup-and-handle pattern. It's one of my favourite and most reliable patterns.

Cup and handle pattern

A cup-and-handle pattern is a bullish continuation pattern where the price forms a rounded "cup" followed by a smaller consolidation or "handle." Once the price breaks above the resistance at the rim of the cup, it typically signals strong bullish momentum with the potential for a significant upward move.

AAPL cup and handle pattern

How to Measure the Target Price of a Cup-and-Handle Pattern:

Calculation of cup and handle target price

1. Measure the Depth of the Cup:

   Find the distance between the lowest point of the cup and the breakout level (rim of the cup).

2. In the attached chart:Breakout level = $199.56

3. Lowest point of the cup = ~$164.42

4. Depth = $199.56 - $164.42 = $35

5. Add the Depth to the Breakout Level:

   Target Price = Breakout Level + DepthTarget = $199.56 + $35 = $234.56

Target Price for AAPL Based on the Chart:

The target price for this cup-and-handle breakout is $234.56. Highest reached was 237 and subsequently price dropped.

Apple has a cup and handle pattern now. What is the calculated target price?

Current price chart of AAPL

From the chart, we can estimate the following:

• Cup High: Approximately $237.42

• Handle Height: Approximately $237.42 - $196.49 = $38.07

Calculating the Target Price:

Target Price = $237.42 + $38.07 = $275.49

Short-term trading on AAPL

Refer to this link on AAPL DLCs: https://dlc.socgen.com/en/product/search/ucode/aapl/type/

AAPL DLCs

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