Cup and Handle Pattern: How to Trade and Target with an Example

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• Also notice how the pattern starts with a bullish trend, which gradually reverses.
• A subsequent breakout from the handle’s trading range signals a continuation of the prior advance.
• The pattern displays clearly defined entry and risk levels, but because volume metrics in the crypto markets are dispersed, it can be challenging to interpret the pattern.
• Once the price moves out of the triangle, the pattern is complete, so you expect it to go up.
• NGTF started the pattern at the end of November 2018 and went into February of 2019.
• CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

I’ve given you hints in this post about how to trade the cup and handle pattern. But if I gave you only “buy here, sell here” I’d be doing you a great disservice. In other words, if enough traders see the cup shape, they can get interested. And then it can turn into a breakout just because so many people believe it will happen.

Cup and handle chart pattern explained

We explore the cup and handle pattern, as well as the inverted cup and handle, and show you how to trade when you recognise these patterns. Commodity and historical index data provided by Pinnacle Data Corporation. Unless otherwise indicated, all data is delayed by 15 minutes. The information provided by StockCharts.com, Inc. is not investment advice. Trading and investing in financial markets involves risk.

Although T-bills are considered safer than many other financial instruments, you could lose all or a part of your investment. Jiko U.S. Treasuries Risk Disclosures for further details. Microsoft Corporation (MSFT) printed two non-traditional cup and handle patterns in 2014. It topped out at $41.66 in April and pulled back to the 38.6% retracement of the last trend leg. Price carved out a choppy but rounded bottom at that level and returned to the high in June. It then ground sideways in a consolidation pattern (first blue box) that lasted for more than five weeks, or close to half the time it took for the cup segment to complete.

What does a king tide in Tampa Bay mean for Idalia’s storm surge?

For example, if a cup forms between $99 and $100, the handle should form between $100 and $99.50, ideally between $100 and $99.65. If the handle dives too deep and erases most what does a cup and handle chart mean of the gains of the cup, you should avoid trading the pattern. As with most if not all patterns, a stop loss is needed when you trade the Cup and Handle price pattern.

Idalia could drop up to 10 inches of rain in the Tampa Bay area. High sea levels would hinder rainwater draining out into the bay. “It’s looking to me that even with the high tide that we’re not going to be talking about catastrophic storm surge,” he said.

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The change in the move is so gradual that the price action creates a rounded bottom on the chart. The beginning of the price decrease and the end of the price increase are approximately on the same level. This rounded structure is the Cup portion within the pattern.

The handle isn’t as pronounced as the first two, but it’s there. Here’s an example of a cup and handle in a longer time frame. NGTF started the pattern at the end of November 2018 and went into February of 2019. After they exit, the stock can consolidate to form the base until it runs again. This happens when traders and investors stop selling shares and shift back into buying mode. Yep, this is a bullish pattern and can be a technical indicator for traders of a potential upcoming breakout.

Is a cup & handle pattern bullish or bearish?

The cup is a bowl-shaped consolidation, and the handle is a short pullback followed by a breakout with expanding volume. A cup retracement of 62% may not fit the pattern requirements, but a particular stock’s pattern may still capture the essence of the Cup with Handle. The target with the cup and handle pattern is the height of the cup added to the breakout point of the handle.

As its name suggests, a cup and handle price pattern forms a cup with a handle on the crypto price chart. The cup is shaped like the letter “u” on the price chart, and the handle is slightly skewed downward. A cup and handle is a technical analysis chart pattern that resembles a rounded bottom followed by a sideways movement or handles. The cup portion of the pattern is created when the price falls and creates a U-shaped bottom. We want to clarify that IG International does not have an official Line account at this time.