Cup and Handle Pattern: Bullish Continuation

Cup and handle structure

A rounded bottom (the "cup") followed by a tight pullback (the "handle") near the cup's rim, then a breakout to new highs. The cup typically takes weeks to form on daily charts, hours on intraday charts. The handle is a shallow, brief consolidation — usually 30–50% of the cup's depth and much shorter in duration.

Entry and risk

Entry: breakout above the handle's high on volume expansion. Stop: below the handle's low. Target: measured move (cup depth projected from breakout). The pattern has a high base rate because the rounded cup itself already signals accumulation — the handle is just the final test before the breakout.

Common failure modes

Failure #1: the "handle" is actually a new leg down, not a shallow pullback. If the pullback exceeds 50% of cup depth, it's no longer a handle — abandon the setup. Failure #2: breakout on low volume — high probability of a fake-out. Always require volume confirmation.