☕ Cup and Handle Pattern – Bullish Continuation Signal

The Cup and Handle Pattern is a bullish continuation pattern that resembles the shape of a tea cup. It indicates a consolidation followed by a breakout in the direction of the prior trend.

📘 What Is the Cup and Handle Pattern?

The Cup and Handle Pattern forms after an uptrend. - The cup is a rounded bottom, showing a gradual consolidation. - The handle is a short consolidation period after the cup, often a slight pullback. The breakout above the handle confirms continuation of the prior bullish trend.

• Occurs after a clear uptrend.
• The cup forms a rounded bottom resembling a "U".
• The handle is a small consolidation or pullback.
• Breakout above the handle confirms bullish continuation.
• Volume decreases during consolidation and rises during breakout.

💡 Market Psychology

- Cup Formation: Price consolidates gradually; sellers lose strength and buyers begin accumulation. - Handle Formation: Short-term pullback or sideways movement; market pauses before the breakout. - Breakout: Buyers dominate, leading to a continuation of the prior bullish trend.

✅ Pro Tip: Wait for a breakout above the handle with increased volume to confirm the trend continuation.

⚙️ How to Trade Cup and Handle Patterns

1. Identify the cup formation after an uptrend with a rounded bottom.
2. Observe the handle consolidation (small pullback or sideways movement).
3. Enter a buy (long) position after breakout above the handle.
4. Place a stop-loss below the bottom of the handle.
5. Set a target equal to the depth of the cup projected from breakout point.

🏁 Conclusion

The Cup and Handle Pattern is a reliable bullish continuation pattern. Correct identification and breakout confirmation with volume help traders capitalize on upward trends.

“The cup collects strength, the handle pauses, and the breakout rewards patient traders.”