What is a bearish cup & handle pattern?

The bearish Cup and Handle pattern forms in a downtrend and is traded as a bearish breakdown signal. So, you can use it to go short on the market if you want. This is how you trade the pattern: You have a sell signal when the price breaks below the lower trend line of the price channel that forms the handle.

What is a cup & handle?

A Cup and Handle can be used as an entry pattern for the continuation of an established bullish trend. It´s one of the easiest patterns to identify. The cup has a soft U-shape, retraces the prior move for about ⅓ and looks like a bowl. After forming the cup, price pulls back to about ⅓ of the cups advance, forming the handle.

What happens if a cup and handle dips below the top?

If the handle drops below the lower half of the cup, it is no longer a ‘cup and handle’ pattern. In most cases, the handle should not dip below the top third of the cup for it to be a cup and handle pattern. What is an ‘inverted cup and handle’?

Is a cup and handle a bullish signal?

The cup and handle is considered a bullish signal, with the right-hand side of the pattern typically experiencing lower trading volume. The pattern's formation may be as short as seven weeks or as long as 65 weeks.