Cup & Handle
A rounded base with a small dip — a classic launchpad for breakouts.
The cup and handle is a bullish continuation pattern that looks exactly like its name: a rounded, U-shaped “cup” followed by a small dip and pause (the “handle”) just before a breakoutWhen price decisively pushes through a support or resistance level. to new highs.
- The cup — price falls, rounds out a gentle U-shaped bottom, and climbs back up to near its old high. The rounded (not sharp-V) base shows a slow, healthy change of sentiment.
- The handle — a small, shallow pullback near the top of the cup, as a few late sellers/profit-takers shake out, before the final breakoutWhen price decisively pushes through a support or resistance level. above the rim.
The cup is a story of patient base-building. A rounded bottom means selling pressure faded gradually and buyers returned steadily — far healthier than a sharp spike. By the time price returns to the old high, the weak hands are gone. The handle is the final, gentle shakeout of the last impatient sellers; once they’re flushed, there’s little overhead supply left, so the breakoutWhen price decisively pushes through a support or resistance level. above the rim can run cleanly. It’s a launchpad precisely because the base did the hard work.
ExampleA stock falls from ₹500, rounds out a base near ₹400 over weeks, and climbs back to ₹500. It then dips mildly to ₹480 (handle) before breaking decisively above ₹500 on volumeThe number of shares or contracts traded in a period. — launching its next leg up.
Key takeawayCup and handle = a rounded U-base (patient sentiment shift) plus a small handle (final shakeout), then a breakoutWhen price decisively pushes through a support or resistance level. above the rim. The healthy base clears overhead supply, making it a classic bullish launchpad. Confirm the breakoutWhen price decisively pushes through a support or resistance level. with volumeThe number of shares or contracts traded in a period..
FAQs
Why is a rounded cup better than a sharp V-bottom?
A rounded base reflects a *gradual*, durable shift from selling to buying — sellers exhausting slowly and buyers accumulating steadily. A sharp V is an emotional snapback that often leaves unfinished selling and overhead supply. The patient rounding is what makes the eventual breakout more reliable.