Dictionary

Cup and handle

A rounded base followed by a shallow pullback near the highs, with the breakout taken above the pullback rather than the whole base.

Cup and handle. Price drifts down and rounds slowly back to where it started, making a bowl shape, then pauses in a small shallow dip called the handle. The dashed line across the rim is the level traders watch.

The cup is a rounding-bottom. The handle is a short, shallow drift lower near the right rim, usually on lighter volume, which shakes out traders who bought the recovery. The entry is a break above the handle.

The handle is the useful part. It provides a nearby invalidation-level, which turns a pattern with a vague stop into one with a defined risk, and the shallowness of the handle is treated as evidence that holders are not eager to sell.

Common failure modes are a handle that is too deep, retracing much of the cup, and a breakout on weak volume that drops straight back inside. Both are worth defining numerically in advance rather than judged by eye after the fact.

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