(10) Favorable Court Decision Or Dispute Resolution
It is one of the most wonderful factors to identify strong base in cup and handle pattern. Legal disputes can arise anytime in corporate world. If the court decision goes in favor of the company management then the stock price is likely to gain significantly.
Similarly, if a business dispute gets resolved between two parties outside the court then also it could be great news for the investors.
If a stock is forming base of cup with handle pattern around such a critical date then it could be an indication of a positive outcome soon.
However, if the stock is forming base after the positive announcements then it could be a sure way to boost the stock price after pattern completion.
[Read Also: 10 Day Trading Tips To Trade Cup And Handle Pattern]
(11) Corporate Debt Restructuring (CDR) In Process
It is one of the most amazing factors to identify strong base in cup and handle pattern. Corporate debt restructuring (CDR) is the reorganization of a company’s outstanding debt obligations.
It is usually achieved by reducing the debt burden through slashing of interest rates as well as increasing the time to repay the debt back.
The stock of such a debt ridden company usually trades at lower levels after correction. Once the debt restructuring is successful, it may start forming a strong base before reaching fair stock valuations.
In such a case, cup with handle pattern completion is very much likely to occur. Thus, investors can take the advantage of such situation along with precautionary measures.
Image Source: Investopedia & Shutterstock
- Strong Base Formation: Shutterstock