Cup & Handle

  • Appears in an uptrend or downtrend
  • Forms a U-shaped basin (not “V”) and a “handle” on the right, which is usually a flag formation (see Flag pattern)
  • Volume is high on the beginning and the ending formation of the basin while volume is low on the middle of the basin
  • Cup should form at least from 7 weeks to 65 weeks
  • Handle usually forms from a minimum of 1 week to 3 weeks
  • The lid of the cup can be considered a major resistance level wherein a breakout can be confirmed
  • Effect: Stock prices can go up when it breaks out from the resistance of the handle (Flag pattern); a breakout can be further validated when prices move pass the the lid or major resistance level of the cup formation.
Cup & Handle