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.

Interactive charts:

• 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

Download our free chart patterns PDF for a guide to 20 classical chart patterns with over 100 interactive charts, also on TradingView.com.

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.

1. This pattern forms after a strong move up in price, usually 30% above the prior base.
2. 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).
3. 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.
4. 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.

Trading volumes

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.