Cup and handle definition

A cup and handle is a bullish chart pattern made of a rounded base followed by a smaller pullback. It usually forms during an uptrend and points to a possible continuation higher.

The cup is a gradual U-shape: price sells off, steadies, and recovers back toward its starting level. The handle is a short, shallow dip that follows, a brief pause before buyers attempt to push price above the pattern's resistance.

A cup and handle on its own is a setup, not a signal. Traders treat it as confirmed only when price breaks above the handle's resistance on stronger volume or clear momentum, and until then the shape can still fail.

Cup and handle Example

A stock climbs to USD 50, falls to USD 40, and grinds back up toward USD 50, tracing the cup. It then eases to USD 47, forming the handle.

If the stock breaks above USD 50, you might read it as a bullish breakout from the cup and handle pattern.