Cup and Handle

The cup and handle is a continuation chart pattern in which price carves a rounded, U-shaped base (the cup) and then drifts sideways or slightly lower in a smaller consolidation (the handle) before resuming the prior advance. The rounded bottom suggests selling pressure faded gradually rather than reversing sharply, while the shallow handle shows only light profit-taking near the old high. Traders typically treat a break above the handle's upper boundary as the pattern's trigger, often projecting a target from the depth of the cup. Common cautions include handles that retrace deep into the cup and cups with sharp, V-shaped bottoms, both of which weaken the pattern's logic. Volume, where available, ideally contracts in the handle.