Hartcourt Companies (fka HRCT)

[MisterEC]

Cup and Saucer Patterns

The Cup formation and the Saucer pattern are two distinctive patterns even though parts of them will have a similar look. The Saucer formation is a bottoming formation and the opposite of a Saucer is the rounding top formation which occurs as a topping pattern.

The Saucer pattern is as stated before a bottoming formation. It will have a definite shape of a stretched or saucer shaped U type of look. Volume will tend to dry up as the stock heads lower and ultimately makes a low point. As the stock slowly rises for the opposite side of the saucer, volume tends to pick up as well, as more and more buying interest is attracted to the stock and/or the formation.

The safest point to make a buy with this formation is at the high point at the left side of the formation. When the price breaks through this level on increased volume, a lot of buying pressure can come into the stock in a very short period of time, which of course causes a large change in the price. If you can get into the stock with a buy stop or other automatic trigger then your reward can be substantial. If you wait too long, of course, most of the move from this particular pattern may be missed.

Saucers, like everything else, in technical analysis are subject to failure from time to time and that is the primary reason for waiting on the break out of the pattern before entering. a position. If you get in too early, you may beat the crowd but from time to time you can expect a failure of the pattern and a loss developing. Careful and close stop loss orders would help to minimize any damage caused by a failure. With this pattern, there is a fine line between getting into a position too early and getting in too late.

The Saucer pattern is generally a long and drawn out pattern sometimes taking years to form and complete. It is a popular daily pattern to search for and use but one in which patience is a plus.

The Cup pattern is much like the Saucer in that the beginning of the pattern shows a slow drifting downward in price. The biggest difference with this pattern is that it is a corrective formation. The Cup will show up on your charts after a powerful price advance.

The left part of the bowl is formed as the bottom of the formation is made. As the bowl or saucer shaped pattern forms on the right, it will incur selling pressure near the previous high of the left side of the pattern. This buying and selling pressure causes the handle of the cup to form. The handle forms with a mostly sideways direction with a slight downward bias.

The time to make your purchase with this formation is when the price breaks up and through the right side of the cup at the point of the beginning of the handle. (sounds like it should be now with HRCT, SOON, to me)

Both of these formations are easily recognized by millions of investors and traders. Therefore, the price moves on the break outs can be very swift and present a challenge for you to get into at the right time. The use of buy stops is one of the easiest ways to enter if you cannot watch the markets during the day and time your entries with market orders.

http://www.technicalcharting.com/archive/2001/2001_11_16.htm