Cup and Handle Explained
A cup and handle is a bullish pattern: a rounded 'U' base followed by a small pullback (the handle), then a breakout to new highs.
Anatomy of the pattern
The cup is a smooth, rounded bottom — price sells off, bases, and recovers to near the prior high, forming a 'U' rather than a sharp 'V'. The rounded shape shows a gradual, healthy shift from sellers to buyers.
The handle is a small, controlled pullback near the top of the cup, drifting slightly down as late sellers are absorbed. A shallow handle in the upper third of the cup is the healthiest version.
The breakout and target
The trigger is a close above the handle's resistance (the rim of the cup), ideally on rising volume. The measured target projects the depth of the cup upward from the breakout.
It is a continuation pattern, so it works best when the broader trend is already up. A deep V-shaped 'cup' or an oversized handle weakens the signal.
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Play Chart Bound free → Try today's Call the Candle →Frequently asked questions
Is cup and handle bullish or bearish?
Bullish. It is a continuation pattern signalling that after a rounded base and a small pullback, price is likely to break out and continue higher.
What makes a good cup and handle?
A smooth, rounded U-shaped cup (not a sharp V) and a shallow handle in the upper third of the cup, ideally with a breakout on increasing volume.
How do I set the target?
Measure the depth of the cup from its rim to its bottom, then project that distance upward from the breakout point above the handle.