Cup & Handle: The Accumulation Pattern, Traded Properly

The shape

Price falls from a high, rounds out a long bottom over one to four months, and climbs back near the old high — that's the cup. Then comes a short, shallow pullback of a few percent — the handle. The signal fires when price breaks above the rim.

Why it works

The cup is patient accumulation: strong hands quietly buying everything weak hands sell. The handle is the final shakeout — the last impatient holders exiting just before the move. When price clears the rim on volume, overhead supply is simply gone.

Our scanner's rules

• Cup depth between roughly 12% and 50% (shallower is noise, deeper is a crash, not a base).
• The bottom must be rounded — a "U", not a "V" — with both rims within ~5% of each other.
• Handle stays shallow (under ~15% off the rim).
• Entry: the close that breaks the rim. Stop: below the handle's low — back inside the handle means the breakout failed. Target: the cup's depth projected above the rim.

Volume on the breakout raises the confidence score; every published signal carries a volatility-checked stop and R:R of at least 0.8.

Common mistakes

• Buying inside the handle "early" — you're front-running a pattern that hasn't confirmed.
• Ignoring the trend context: cups that form *below* a falling 200-day average fail far more often.
• Holding through a handle-low break "because the cup was beautiful." The stop is the pattern's honesty test.

Find live matches on the Strategies page — the Cup & Handle card shows today's count.