Cup and Handle Pattern
The cup and handle is a bullish continuation pattern resembling a teacup. The cup forms a rounded bottom followed by a small consolidation (handle) before price breaks out to new highs.
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Key Characteristics
Trading Tips
- ✓Wait for breakout above handle resistance
- ✓Volume should be strong on breakout
- ✓Stop-loss below handle low
- ✓Best when cup is U-shaped, not V-shaped
Signal Strength & Reliability
The cup and handle is a classic bullish continuation pattern. It's most reliable when the cup is U-shaped (not V-shaped), the handle is small, and the breakout has strong volume.
Cup and Handle FAQs
Common questions about the cup and handle pattern
A valid cup should be U-shaped (not V-shaped), with both sides at similar heights. The handle should form in the upper third of the cup, retrace no more than 50% of the cup's rise, and have declining volume.
The cup typically takes 1-6 months to form on daily charts. The handle usually forms over 1-4 weeks. Very short cups may not be reliable. Very long formations can work but require more patience.
Yes. If price breaks below the handle low, the pattern has failed. Some traders wait for a breakout above the cup's rim for additional confirmation before entering. Always use a stop-loss.
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Disclaimer: Wyck provides technical analysis for educational purposes only. This is not financial advice. All trading involves risk. Always consult a licensed financial professional before making investment decisions.
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