Cup & Handle
This pattern looks like a bowl followed by a small pullback, resembling a coffee cup with a handle. It often appears in an uptrend, hinting at continuation.
How to Identify
Cup Shape. Price drifts down in a gentle arc, then climbs back up to the starting point.
Handle. After reaching the “rim,” price pulls back slightly, forming a short dip.
Volume. May dip during the cup’s formation and pick up once price starts to move higher.
How to Use
Entry: many wait for a break above the handle’s resistance line.
Stop: place stops below the handle, so if price fails to push higher, your risk is limited.
Target: measure the distance from the bottom of the cup to the rim, then project it upward from the handle breakout.
Pro Tips
Make sure the cup is fairly rounded, not too sharp.
Check overall trend direction — Cup & Handle usually appears in a bullish context.
Watch volume for a surge once price clears the handle.
Exercise
Scan historical charts for a bowl-like dip followed by a small pullback. Mark the cup rim, identify the handle, then watch for a breakout. Pretend you enter once price clears the handle. Place stops under the handle and aim for a target based on the cup’s depth. Track your results across different symbols to see which setups look most promising.
Last updated