Cup with Handle Pattern
Learn to recognize and trade a cup with handle pattern through interactive charts.
What is a cup with handle pattern?
A cup with handle is a bullish chart pattern, which suggests that the price is about to resume its uptrend after consolidating.
- Antero Resources (AR) Cup with Handle stocks
- ExxonMobil (XOM) Cup with Handle stocks
- Wheaton Precious Metals (WPM) Cup with Handle stocks
- Apple (AAPL) Cup with Handle stocks
Cup with handle duration
The cup can develop over 1 to 6 months, and sometimes longer. The handle should ideally complete within 1 to 4 weeks.
Cup with handle characteristics
This pattern consists of a U-shaped base, often followed by a downward-sloping trading range, which resembles a handle.
- This pattern forms after a strong move up in price, usually 30% above the prior base.
- You can then expect the price to retrace between 12% and 33% from the top. However, in volatile markets, the price can correct between 1.5 and 2.5 times the change in broad market indices (e.g. S&P 500 or the Nasdaq).
- The base of the cup should resemble a 'U', rather than a 'V'. This allows for consolidation, as weak hands and speculators unwind their positions, before new buyers start driving the price up.
- Once the cup completes, it’s typical but not essential for the price to move downwards, by up to 10%. At times, this pattern can resemble a flag or pennant. But it can also take the form of a shorter pullback. This pattern is known as the handle.
Look for one to two weeks of tight trading ranges and declining volumes in the cup and handle. Wide spreads suggest a stock is in the market's eye and breakout could fail.
Cup with handle trading tips
Wait for the price to break convincingly above the handle to open a long position. Some traders wait for a break above the resistance line that runs through the highs of the cup. The breakout should be accompanied by rising volumes. The greater the volume, the stronger the pattern.
Trade CFDs on 70+ currency pairs, crypto-currencies, commodities and indices with leverage up to 1:... MoreTrade CFDs on 70+ currency pairs, crypto-currencies, commodities and indices with leverage up to 1:500. Get a 100% bonus on your first deposit, up to $2,000.
Trade Forex on floating spreads from 0 pips plus commission on MT4 or MT5. Get started from a low $... MoreTrade Forex on floating spreads from 0 pips plus commission on MT4 or MT5. Get started from a low $50 deposit. Get market execution with no requotes. LiteForex pays 2.5% interest per annum on the balance of your account.
Best Pro Account
Trade CFDs on Forex, crypto-currencies, stocks, indices, metals and energies with dynamic leverage ... MoreTrade CFDs on Forex, crypto-currencies, stocks, indices, metals and energies with dynamic leverage on MT4 or MT5. Low spreads from 0.1 pips, no commission and instant execution. All EAs are allowed.