Cup and Handle Pattern
Original schematic showing the guide's principal visual relationships.
Rounded cup → shallow handle → close above the cup's rim resistance.
Pattern anatomy
A rounded base followed by a smaller pullback near resistance before a possible upside breakout.
Rounded cup → shallow handle → close above the cup's rim resistance.
How it works
Identify the prior trend first, mark repeated swing highs and lows, then draw only the support, resistance, or neckline justified by those pivots. A pattern remains provisional until price closes beyond its confirmation boundary; visual resemblance alone is not enough.
How to read it
The cup repairs an earlier decline while the handle tests whether supply remains near the old high. The cup depth is often projected from the breakout.
Practical example
Price recovers from a rounded base to the prior high, then forms a shallow handle near resistance. A close above the rim completes the pattern; a deep handle or a V-shaped cup signals a different, less orderly structure.
Confirmation checklist
Confirm a clear impulse before the consolidation, controlled price compression during formation, and a close beyond the continuation boundary. Volume often contracts during the pause and expands on breakout.
Limitations and false signals
V-shaped recoveries and handles that retrace deeply do not show the same gradual accumulation. Failed rim breaks are common.
Limitations and false signals
Frequently asked questions
What does this pattern or indicator describe?
A rounded base followed by a smaller pullback near resistance before a possible upside breakout.
How should the signal be confirmed?
The cup repairs an earlier decline while the handle tests whether supply remains near the old high. The cup depth is often projected from the breakout. Confirm a clear impulse before the consolidation, controlled price compression during formation, and a close beyond the continuation boundary. Volume often contracts during the pause and expands on breakout.
What can cause a false signal?
V-shaped recoveries and handles that retrace deeply do not show the same gradual accumulation. Failed rim breaks are common.