The cup and handle breakout is
a classic pattern which stock market traders search for constantly. A cup and
handle pattern means that the stock has made a consolidation where many of
the weaker holders sell their shares.
Then as the stock breaks into
new highs a handle is formed. It is formed because many investors who bought
at the previous high are now trying to get back the capital that was
initially invested at the previous high. A handle should move sideways or
slightly down so investors who bought at the previous high can get back their
capital. Once this handle is completed the stock has very little selling
pressure and buyers now gain control and push the stock into new highs. Many
times the percentage gains are impressive.
Sometimes a stock forms a
triangular pennant after a breakout as in the case of U.S. Gold (UXG). These
triangular pattern in a handle are bullish and provide investors an opportunity
to get in before a major run.
My ideal buy point is after
the breakout of the cup when the handle pulls back to key support. Right now
is a good opportunity to add shares before a breakout at $4
There are four upcoming events
that could make this stock move.
1) 20 drilled hole results
from El Gallo in 2 weeks.
2) El Gallo Initial Resource Estimate in 4 weeks.
3) Additional Results From Regional Exploration in 6 weeks.
4) El Gallo Economic Assessment by year end.
I am excited by the results
coming out in mid July from the regional exploration. UXG invested a lot into
Mexico this year knowing that this land package could contain a massive
amount of silver. I am excited for the next few weeks both from a technical
and fundamental perspective.
