Stock Mimicry
To name a few, look at the chart of Reliance Industries, ONGC, APTECH, Bajaj Hindustan, Bartronics, BEML, Bharat Forge, ING Vyasa Bank, IVRCL Infrastructure, Jindal Drilling and J P Associate. Currently, you will find a similar pattern of cup-and-handle bases forming in all the charts, which could lead to continuation moves to the upside in the near future.
However, before I say about it, I have found that this particular pattern formation has not been confirmed by most of the stocks. Even if they have tried to surpass top of the candle in some trading sessions, they have again failed to honour the top of the handle as their support in consecutive session. It is worthy to mention that of course, some good number of stock have followed the very nature of cup-and-handle pattern and some stocks appears are in the midst of completing cup-and-handle bases, and could be poised for continuation moves higher.
The cup and handle was introduced by William O’Neil in his book, "How to Make Money in Stocks". The basic premise is that the cup and handle is a consolidation pattern that consists of two parts. The first is a consolidation that takes the shape of a rounded bottom, or saucer, which is labeled the “cup”. After the right-hand side of the cup forms, often a stock will pull back partially in a flag -type pattern, which gives the bases the appearance of a “handle”(on declining volume). Once a stock clears the handle, the pattern is considered confirmed and often makes a continuation move higher. Notice the left side of the base has an initial increase in volume, but it tapers down as it nears the bottom of the cup. Volume begins to increase again as it rallies to the top part of the right side, and begins to taper off again as it builds the handle.
It’s interesting how many stocks will follow similar patterns at the same time. Because most stocks will move in concert with each other, traders will see the same pattern developing across numerous stocks in diverse sectors. As with all patterns in technical analysis, it’s important to not get caught up in whether the pattern is picture perfect or what it is labeled. Traders should pay close attention to the price and volume patterns to determine what holders of the stock are doing. More often than not, patterns do not follow their precise definition, but by paying attention to subtle clues a trader can identify accumulation patterns.