What it looks like
The cup is a gradual, rounded U shape, not a sharp V: price drifts down, flattens out, and recovers to about the level where the fall began. That level is the rim. The handle is a small, short pullback near the rim, much shallower than the cup, often drifting slightly down. The pattern completes when a candle closes above the rim. The depth is from the rim down to the bottom of the cup.
What it means
The slow, rounded recovery shows buyers steadily taking control rather than rushing. The handle is one small shake out where the last nervous holders sell. Patient buyers absorb that selling, and when price closes above the rim there is little supply left overhead. It is a continuation of an earlier rise after a long rest.
How to trade it
- 1
Mark the rim (the high at both sides of the cup), the bottom of the cup and the low of the handle.
- 2
Confirmation: a candle closes above the rim.
- 3
Entry: buy at that close.
- 4
Stop: below the handle's low. Example on gold daily: rim at 4,100, cup bottom 3,980 (120 points deep), handle low 4,070. Buy the close at 4,105, stop at 4,065, a 40 point risk.
- 5
Target: the cup depth above the rim, about 4,220.
A close below the low of the handle.
Where it works best
On 4 hour, daily and weekly charts, where the cup takes weeks to form, and after a prior rise in the same direction.
WickSpeak finds cup and handle patterns automatically and names them on the candles that made them. The note explains what it is, how to trade it and that a close below the handle proves it wrong. In Playbook you can use it as a condition in a play, alone or alongside other patterns and indicators (any of the 146 patterns can be a condition), and backtest it on past candles with your own costs.
Common mistakes
- Calling a sharp V a cup; the rounded shape is what shows steady buying.
- Accepting a handle that drops deep into the cup, which weakens the pattern.
- Buying inside the handle before the rim has broken.
Related patterns
Questions traders ask
Is cup and handle bullish?
Yes. It is a bullish continuation pattern: a long rest after a rise, followed by a break to new highs above the rim.
How do you measure the cup and handle target?
Measure the depth of the cup from the rim to the bottom, then add it to the rim. That is the usual target, though resistance may come first.
How deep should the handle be?
The handle should be small compared with the cup. If it falls a long way back into the cup, the pattern is weaker and many traders skip it.
What timeframe suits cup and handle?
It is mostly a daily and weekly pattern because the cup takes time to form. On short intraday charts the shape is often too noisy to trust.