Caterpillar Inc, which is a manufacturer of construction and mining equipment is very close to a breakout on a Cup and Handle formation (see image).
A ‘Cup and handle’ is a price pattern whereby the cup is in the shape of a ‘U’ and the handle has as slight downward drift. Once the pattern is formed, we should expect the prices to rise going forward.
For such a trade, stop losses are normally placed below the handle or below the cup deepening the traders risk tolerance and market volatility.
What are your thoughts?