What Is Cup and Handle?
Popularized by William O'Neil of Investor's Business Daily, the Cup and Handle is a bullish continuation pattern. The cup is a rounded bottom forming over weeks or months. The handle is a smaller pullback after the cup completes — usually 1-4 weeks.
Confirmation comes on a breakout above the handle's resistance with volume. The measured-move target is the depth of the cup projected up from the breakout.
The pattern reflects gradual accumulation followed by a brief shakeout (handle) before the next leg up.
Reality check: Best applied on daily and weekly charts of fundamentally strong stocks in uptrends. Cup and Handle on a 5-minute chart of a meme stock is statistical noise.
Related terms
- Breakout — A price move beyond an established support, resistance, or chart pattern boundary.
- Consolidation — A range-bound period of relatively quiet price action between trending moves.
- Trend — The general direction of price movement over a period — uptrend, downtrend, or sideways.