Cup and Handle Pattern Definition

Description

The Cup and Handle is a bullish continuation pattern that resembles a teacup on a trading chart. This pattern is identified by a rounded bottom representing the cup, which indicates a period of consolidation followed by a recovery that mirrors the prior uptrend in shape.

This is followed by a slight, short-term downward drift—the handle—often seen as a consolidation phase before a breakout. The breakout from the handle typically indicates a strong move to the upside, suggesting that the previous upward trend is likely to continue. Traders often look for increased volume as confirmation of the breakout to validate the pattern’s predictive power.

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