Cup and Handle Pattern

What the Cup and Handle pattern means

The rounded cup shows a slow, healthy recovery back to a prior high, and the shallow handle shows a brief shakeout of weak hands before the move continues. A breakout above the rim confirms buyers are ready to push to new highs.

How the Cup and Handle is traded

• →Enter on a close above the rim, the resistance set by the cup's highs.
• →The target is roughly the depth of the cup added to the breakout point.
• →Stop goes below the low of the handle.
• →The best handles are shallow and form in the upper half of the cup.

Common mistakes

• ✕Buying inside the cup before the rim breaks.
• ✕Accepting a deep, V-shaped base or a handle that gives back most of the cup.