Cup and Handle
BullishReliability: MediumAlso called · cup with handle, cup base breakout
A bullish continuation — a U-shaped cup followed by a short pullback (the handle).
How to spot it
- The handle's pullback is much shallower than the cup's depth
- Volume dries up through the handle
Why this shape forms
A rounded base followed by one last shallow shakeout. Whoever could not hold through the shake is gone, which is what leaves the path above lighter.
Where it actually means something
The handle should form near the prior high, not right off the lows. A dip taken just after the bottom is not a handle.
What else to check
The handle should not retrace more than about a third of the cup depth. Volume drying up through the handle is the normal, healthy version.
This means you're wrong
The shape breaks if the handle retraces below the middle of the cup.
The mistake beginners make
Entering on the cup alone, without waiting for the handle.
Easy to confuse with
A handle that runs deep is often the start of a double top instead. Measuring the depth beats eyeballing it.
Real examples from the community
Patterns are probabilistic tendencies, not guarantees. This is not investment advice.