Continuation pattern · bullish bias
Cup and Handle pattern
A cup and handle is a U-shaped base (the cup) followed by a shallow pullback (the handle) near the old high. A break above the rim suggests the base has finished and the prior uptrend may continue.
How to identify a cup and handle
- A prior uptrend into the left side of the cup.
- A rounded, U-shaped decline and recovery rather than a sharp V.
- The recovery returns near the prior high, forming the rim.
- A small, shallow pullback forms the handle, usually in the upper part of the cup.
What confirms it
A close above the rim after the handle forms.
What invalidates it
A handle that falls deep into the cup, or a close below the handle's low after an attempted breakout.
How traders project a target
Add the depth of the cup to the breakout level.
Common mistakes
- Accepting a sharp V-shaped bottom as a cup.
- Accepting a handle that retraces most of the cup.
- Ignoring how long the base took: very short cups on low timeframes are less meaningful.
Where it appears
Popular on daily and weekly stock charts, but the same logic applies to any market.
Frequently asked questions
Is cup and handle bullish?
Yes, it is a bullish continuation pattern that confirms on a break above the rim.
How deep should the handle be?
Shallow. A handle that drops into the lower half of the cup weakens the pattern.
Can a cup and handle form without the handle?
Price sometimes breaks out straight from the cup, but then it is better described as a rounding bottom.
Related chart patterns
Educational content only, not financial advice. Chart patterns describe probabilities, not certainties, and every pattern can fail. See our disclaimer.