Cup and Handle, Scallops, and Diamonds

There’s a reason this section was the last to be covered under the classical chart patterns. It’s because these patterns are generally the least reliable patterns and the most difficult to accurately identify. In most cases, they will only be visible on the larger time frames (weekly or even monthly). 

The saucer or cup pattern is just a rounded bottom or rounded top. Pretty simple, but must occur at the right place to be valid.  A scallop is the same as a cup, but on a shorter time frame and generally indicates a continuation as opposed to a reversal.  The diamond pattern is just a more symmetrical variant of the cup where the beginning of the pattern starts with a broadening wedge and the ending of the pattern is a triangle. You’ll get a lot more practice with this pattern when we cover Gann Theory in the Smart Money course. 

Please don’t dwell on this too much; especially as a new trader with little experience. The success rate of these patterns are relatively low because most people fail to identify them properly. As such, there will be no homework or test questions on these three patterns. Consider this an introduction to intermediate level classical chart patterns.