Cup and Handle Pattern: How to Spot and Trade It 🕯
The Cup and Handle is one of the most recognized bullish continuation patterns in technical analysis. It appears during uptrends and suggests that after a short pause, the price might break out and move higher.
☕️ The "cup" part of the pattern is a rounded, U-shaped bottom. It shows a period where buyers slowly regain control after a downtrend, leading to a retest of previous highs. This part should not be too steep — ideally, it's a smooth curve with a healthy correction.
After the cup is formed, the "handle" follows. It’s a short-term consolidation or pullback that usually takes the form of a small descending channel or triangle. This part shakes out weak hands and traps early breakout buyers 😱
📈 The pattern is confirmed when the price breaks above the handle’s resistance with a strong candle and volume increase. This is usually the signal to enter a long position.
To avoid fakeouts, many wait for a daily close above the breakout level and use a stop-loss below the handle's low 🧠