The Cup and Handle Meets the Price Volume Trend: The Secret Weapon of Forex Traders

The Hidden Pattern That Separates Winners from the Rest

Imagine you’re at a flea market, and you spot a rare collectible at a bargain price. Do you wait for the seller to realize their mistake, or do you snatch it up before someone else does? That’s exactly how savvy traders approach the Cup and Handle pattern—a price formation that signals a potential breakout before the crowd catches on. But what if I told you there’s an even stronger confirmation tool hidden in plain sight?

Enter the Price Volume Trend (PVT)—the unsung hero of trend confirmation. While most traders obsess over candlestick patterns alone, the elite use PVT to validate price action, ensuring they don’t chase fake breakouts or fall into liquidity traps.

Why Most Traders Get It Wrong (And How You Can Avoid It)

Many traders identify a Cup and Handle pattern and jump in blindly, expecting a meteoric rise. But without volume confirmation, they’re essentially buying into hype without substance—like investing in a tech startup with no revenue but a fancy website.

PVT fixes this by tracking both price and volume, showing whether big-money players are actually fueling the move. A rising PVT during the Cup and Handle formation? That’s a golden signal. A stagnant or declining PVT? That breakout might be a trap set by market makers.

Step-By-Step Guide to Trading the Cup and Handle with PVT

Here’s how you can outsmart the herd using these two powerful indicators:

1. Spot the Cup and Handle Formation

• A “cup” forms when the price declines, stabilizes, and then climbs back to previous highs, resembling a U-shape.
• A “handle” follows—a small consolidation or slight pullback before the breakout.
• The breakout happens when price breaches the previous resistance level, typically on increasing volume.

2. Cross-Check with Price Volume Trend (PVT)

• Add PVT to your chart.
• Look for a rising PVT as the handle forms. This means volume is supporting the price rise.
• If PVT diverges negatively (falling while price is rising), it’s a red flag—big players might be exiting while retailers FOMO in.

3. Enter and Manage Your Trade Like a Pro

• Entry Point: Enter only if PVT confirms the breakout.
• Stop Loss: Place below the handle’s lowest point to minimize risk.
• Profit Target: Measure the depth of the cup and project that upward from the breakout point.

Case Study: How a Smart Trader Used This to Bank a 30% Gain

Let’s take an example from the EUR/USD chart.

• A textbook Cup and Handle formed on the 4-hour timeframe.
• Volume was deceptively low, making it look like a weak setup.
• However, PVT showed a steady increase during the handle phase.
• Result? A sharp 30% surge post-breakout while most traders hesitated!

Expert Insights: What The Pros Say About This Strategy

According to John Murphy, a pioneer in technical analysis, price-volume relationships are crucial for validating breakouts. In his book Technical Analysis of the Financial Markets, he emphasizes how volume precedes price, making indicators like PVT indispensable.

Meanwhile, Linda Raschke, a legendary trader, notes that the most successful trades happen when patterns align with volume signals. She highlights that volume-based indicators like PVT allow traders to “follow the smart money” instead of being fooled by deceptive price moves.

Insider Tip: The Hidden Edge Most Traders Overlook

Most traders use basic volume bars, which can be misleading. Unlike the standard volume indicator, PVT accounts for both price changes and volume, making it a superior tool for tracking institutional buying and selling.

If you want to stop second-guessing breakouts and start riding high-probability trades, it’s time to integrate PVT into your Cup and Handle strategy.

Want to Supercharge Your Trading? Get These Free Tools!

Looking to take your trading to the next level? Check out these game-changing resources:

• Stay Ahead of Market Moves: Get real-time Forex news & economic indicators: https://starseedfx.com/forex-news-today/
• Learn Advanced Trading Strategies: Access free Forex courses: https://starseedfx.com/free-forex-courses
• Get Insider Alerts: Join the StarseedFX community: https://starseedfx.com/community
• Trade Smarter: Use the Smart Trading Tool: https://starseedfx.com/smart-trading-tool/

Final Thoughts

The Cup and Handle is already a powerful formation, but when paired with Price Volume Trend, it becomes an unstoppable force. Stop guessing, start confirming, and make sure you’re trading with the smart money—not against it.

—————–
Image Credits: Cover image at the top is AI-generated