Cup and Handle

The Cup and Handle is a bullish continuation chart pattern that typically forms after an uptrend and signals the potential for further upside. It begins with a rounded U-shaped cup, indicating a gradual shift from selling pressure to buying interest, followed by a short-term handle, which represents a mild pullback or consolidation before the next move. A bullish confirmation occurs when the price breaks above the handle's resistance with strong trading volume, suggesting renewed buying momentum. Traders often use the depth of the cup to estimate the potential price target, while placing a stop-loss below the handle to manage risk. When supported by increasing volume and the overall market trend, the Cup and Handle pattern is considered a reliable technical setup for identifying potential breakout opportunities.