Cup and Handle Pattern: How to Spot and Trade It đŻ
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.
âïž 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 â ideally, it's a smooth curve with a healthy correction.
After the cup is formed, the "handle" follows. Itâs 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 đ±
đ The pattern is confirmed when the price breaks above the handleâs 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 đ§