Cup and Handle

A cup and handle pattern is a bullish continuation chart pattern that is characterized by a consolidation period followed by a breakout. There are two parts to the chart pattern:

  • The cup, which is formed by a period of price action that looks like a rounded bowl or a teacup when a trend line is drawn across the price lows. This occurs after the initial bullish trend.
  • The handle, which is formed by a period of price consolidation following the cup and which indicates that the price of the asset is experiencing some indecision prior to when buyers resume their activities to send the price of the asset upwards.

Usually, a trend line resistance can be traced above the price highs following the initial trend advance to form the rim of the cup, which is the reference point for an upside price breakout.

Cup and Handle