Continuation pattern · bearish bias
Inverse Cup and Handle pattern
An inverse cup and handle is an upside-down cup (a rounded top) followed by a small bounce (the handle). A break below the base suggests the decline may continue.
How to identify a inverse cup and handle
- A prior downtrend into the start of the pattern.
- A rounded rise and fall forming an upside-down cup.
- A small bounce near the base forming the handle.
What confirms it
A close below the base after the handle.
What invalidates it
A handle that rallies deep into the cup, or a close back above the handle high.
How traders project a target
Subtract the height of the cup from the breakdown level.
Common mistakes
- Forcing the pattern onto a sharp spike and drop.
- Ignoring how deep the handle bounced.
- Shorting before any break of the base.
Where it appears
Less common than the bullish version. Most useful in markets already in a downtrend.
Frequently asked questions
Is an inverse cup and handle bearish?
Yes. It is a bearish continuation pattern that confirms on a break below the base.
What invalidates it?
A close back above the handle's high suggests sellers have lost control.
Does it need a prior downtrend?
As a continuation pattern, yes. At the top of an uptrend the same shape is usually read as a rounding top.
Related chart patterns
Educational content only, not financial advice. Chart patterns describe probabilities, not certainties, and every pattern can fail. See our disclaimer.