Cup and Handle

A cup and handle forms over weeks or months. First, price drops, rounds out at a low, and rallies back to the original high — that's the cup. Then there's a small, shallow pullback near the highs — that's the handle. When price breaks above the high after the handle, the pattern completes and a strong uptrend usually follows. The pattern works because it represents accumulation followed by a final shake-out. The cup is where buyers slowly build positions through the bottom. The handle is where weak hands get flushed before the real breakout. The break above the rim is when institutional buyers commit and price runs. Measured target: the depth of the cup projected up from the breakout. A 200-pip cup means a 200-pip target above the rim.