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Lesson 9: 6.8: Cup and Handle Pattern
Master the Cup & Handle pattern, analyzing the accumulation phase and handle breakout mechanics.
1. The Cup and Handle Structure
The Cup and Handle is a bullish continuation pattern that resembles a tea cup. The 'Cup' is a rounded, bowl-shaped consolidation representing a gradual transition from selling pressure to accumulation.
The 'Handle' is a brief, downward-sloping flag or channel that forms on lower volume near the cup's right rim. This handle serves as the final shakeout of weak holders before the breakout.
★ Pro Rule: The handle should not retrace more than 38.2% to 50% of the cup's depth to remain a valid high-probability setup.
Click to enlargeTechnical Market Structure Blueprint
Interactively map key institutional Price Action patterns. Switch between the 4 technical blueprints below and click the glowing blue hotspots to dissect the market mechanics.
Pattern Technical Explainer
Select any glowing node on the technical chart to inspect the institutional structure details.
KNOWLEDGE RECONNAISSANCE
What is the psychological purpose of the 'Handle' in a Cup and Handle pattern?
More lessons in this module
- 6.0: Introduction to Chart Patterns
- 6.1: Flag Patterns
- 6.2: Pennant Patterns
- 6.3: Triangle Formations
- 6.4: Wedge Patterns
- 6.5: Channel Trading Mechanics
- 6.6: Head and Shoulders Formations
- 6.7: Double Tops and Bottoms
- 6.9: Ascending and Descending Triangle Breakouts
- 6.10: Pattern Failure & Trap Mechanics
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