What is a cup with handle pattern?

A Cup With Handle pattern has two parts—a cup and a handle. The cup forms after an advance in price. This prior trend is important as is the duration of the trend. The trend should only be a couple of months old. After completing the cup pattern, a trading range develops on the right side and the handle is formed.

What does a cup pattern look like?

The cup pattern forms after an advance and looks like a bowl with a round bottom. It forms after a price advance. After that pattern forms, a “handle” forms to the right of the cup within a trading range. Finally, there is a breakout above the range of the handle, showing a bullish continuation of the prior advance.

What is an 'inverted cup and handle' pattern?

An ‘inverted cup and handle’ is a chart pattern that indicates bearish continuation, triggering a sell signal. Think of it as an upside-down cup and handle. If you look at the regular cup and handle pattern, there is a distinct ‘u’ shape and downward handle, which is followed by a bullish continuation.

Is a cup and handle a continuation or a reversal pattern?

If the bullish cup and handle occurs after a bullish price move, it will be considered a continuation. If the bullish cup and handle occurs after a bearish price move, it will be considered a reversal pattern. This pattern was named cup and handle because it resembles a cup with a handle.