USDINR Cup and Handle

Not a pattern that I have used often but it is peculiar when it shows up. Essentially I noticed that a lot of people mark this as an inverted head and shuolders bottom. Technically I feel that is wrong because a inverted head and shoulders should form after prices decline. In other words there should be s decline in prices before the left shoulder. Or more aptly trend has to be down before the pattern forms . In this case the inverted structure is a consolidation or continuation pattern. So I concluded that the wrongly called inverted h&s is essentially a Cup and Handle pattern. A cup and handle pattern has two more requirements. A rounding head and more often than not a right shoulder that is essentially a consolidation pattern like a triangle or a flag.

So this chart of the USDINR shows just that over the last year. And the most recent pattern was a flag just below the neckline. This flag is what marks the take off point from the Handle. A breakout from the pattern is what kicks of a fresh major trend in the direction of the previous trend. In this the trend has been up. So let us see how far the breakout leads us. It is supposed to mark a trending phase to a new high.