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Boeing, BA, just traced out a text book cup with handle pattern that failed.
I would appreciate analysis from Dr. G or others regarding how this type
of failed pattern develops and whether there are key charateristics to watch
for or price targets that can be anticipated.
BA has been one of the small hand full of stocks in the DOW industrials that
has been strong over the last four or five months. Starting on September
27, it began tracing out a cup with handle. The handle began forming about
November 1 and was progressing nicely on declining volume with a retracement
of 25 percent or less of the depth of the cup. On November 10, prices broke
and retraced more than 32 percent of the depth of the cup over the next two
days. Some sources say that cup with handle formations which have handles
that retrace more than 25 percent of the depth of the cup are prone to
failure. BA broke out from its handle on November 21 with above average
volume, however, prices promptly fell back into the handle on November 22.
This in my mind constitutes a failure of the pattern.
Has the pattern in fact "failed"? Can we expect a big decline like the one
ORCL experienced following its failed cup with handle? What should we watch
for in terms of price and volume to confirm or refute our analysis?
Thanks,
Dan
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