Cup and Handle

The cup and handle is a technical chart pattern used in trading to identify potential bullish trends. It is named for its resemblance to a cup with a handle, forming after a period of consolidation. Traders use this pattern to predict upward momentum after the handle forms.

How the Cup and Handle Works

The pattern begins with a rounded bottom (the “cup”) that signals a market correction or retracement. The handle follows, typically a smaller consolidation period, and it’s considered a place for potential buy signals. Once the price breaks above the handle, it is seen as a sign of upward price movement.

Why the Cup and Handle Matters

This pattern is considered reliable for predicting long-term upward price movements and is widely used by traders to make informed decisions on when to buy into a market. The cup represents a period of accumulation, while the handle forms as traders consolidate their positions before a breakout.