Cup and handle pattern
The cup and handle pattern is a rounded dip back to an old high, then a small pullback. See the depth and handle rules, its look-alikes, and tap the right rim.
A cup and handle (also called a cup with handle) is a rounded dip that climbs back to its old high, then a small, shallow pullback: the handle (on this site: rims within 3% of each other, a cup 8% to 40% deep with at least 6 candles in its bottom quarter, and a handle of 3 to 10 candles).
Practice: tap the right rim of the cup
How to identify it (the exact rules)
These are the rules this site uses to build and grade every chart. Traders do not all use the same numbers; ours are published so you can check every answer (see the methodology).
- Swing high: a candle whose high is above the highs of the 3 candles before it and not below the highs of the 3 after it, so a tie counts once, at the first candle (swing low: the mirror).
- Cup and handle: rims within 3%, depth 8% to 40%, at least 6 candles in the bottom quarter (rounded), then a shallow handle.
- The two rims are consecutive swing highs.
- Cup: rims at least 12 candles apart; handle of 3 to 10 candles that stays in the upper half of the cup and below the right rim.
What it shows
After a rise, price slips. The selling does not end in one sharp low. It fades slowly, the bottom flattens out, and buyers return just as gradually. Price works its way back up to the area of the old high, which gives the cup its rounded shape.
Near that old high, a second, smaller wave of selling often appears. Some of it can come from people who bought near the top and are glad to get out even. Price dips a little: that is the handle. If the dip stays shallow, the supply waiting at the old high looks modest. In the chart above, you tapped the right rim: the swing high where the cup ends and the handle begins.
The parts of a cup with handle
| Part | What it is | Rule on this site |
|---|---|---|
| Left rim | Swing high where the cup starts | Higher than the 3 candles on each side |
| Cup | The rounded dip between the rims | At least 12 candles wide, 8% to 40% deep |
| Bottom | The base of the cup | At least 6 candles with a low in the bottom quarter |
| Right rim | The next swing high | Within 3% of the left rim |
| Handle | The candles after the right rim | 3 to 10 candles, never above the right rim |
| Handle depth | How far the handle dips | Stays in the upper half of the cup |
There is also a mirror version, the inverted cup and handle, which forms after a fall. The exercise on this page only uses the upright one.
Most often confused with: the V-bottom and the rounding bottom
A V-bottom drops fast and recovers fast, with one sharp low and almost no time spent near it. The cup is the opposite: price spends time near the bottom. That is why the site asks for at least 6 candles in the lowest quarter of the cup. The contrast is built into the rules: the trough of a double top on this site must be sharp, with at most 4 candles in its bottom quarter, so the two shapes can never be mistaken for each other in an exercise. A rounding bottom has the same curved base but no handle. It can come before a cup and handle, or stand on its own. And a double bottom shows two distinct lows with a rally between them, while a cup has one broad base.
What it does not tell you
The cup does not tell you whether a handle will form, and the handle does not tell you whether price will clear the rim. Many cups simply roll over again at the old high. Chart readers usually wait for a close above the rim before they treat the pattern as complete, and even then it says nothing about how far price may run. The measured move convention adds the cup's depth above the rim. That is a reference line, not a forecast.
How reliable is it?
There is no reliable statistic. The best-known academic test of automated pattern detection, Lo, Mamaysky and Wang (2000), covered shapes such as head and shoulders, triangles, rectangles and double tops and bottoms, but not the cup and handle. We know of no peer-reviewed study that applied fixed cup and handle rules to a broad sample and published a result we could cite. Success rates you see quoted for this pattern come from hand-picked charts, where the cups that failed were never counted.
Where the idea is proven wrong
The idea is that the handle is a short, shallow pause below the old high. Three things break that idea, and each one is a rule here. First, a handle that sinks into the lower half of the cup is no longer a pause: it is a new decline, and the site no longer calls it a handle. Second, a handle that drags on past 10 candles has lost the short, tight look the pattern describes. Third, a candle that trades above the right rim ends the handle; what happens next is a test of the old high, which is a different question from the shape of the cup.
Volume
Descriptions of this pattern often mention quiet volume near the bottom of the cup and in the handle. Volume plays no part in this exercise: the right rim is found from the price shape alone.
Frequently asked questions
Is cup and handle bullish?
It is read as bullish because it shows price recovering to an old high and holding most of that recovery through a small pullback. Most chart readers wait for a close above the rim before treating it as complete. Until then, the cup can still turn into a failed retest of the old high. It describes a shape, not a promise.
How deep should the cup be in a cup and handle pattern?
There is no single official depth. This site uses 8% to 40% below the lower rim, with at least 6 candles in the bottom quarter so the base is rounded. A shallower dip looks more like noise or a flat pause; a much deeper one looks more like a crash and recovery. Whatever the rule, it should be fixed in advance so you are not adjusting it to fit each chart.
How long should the handle be?
On this site, the handle lasts 3 to 10 candles after the right rim. It never trades above the right rim, and its lows stay in the upper half of the cup. A handle that drags on much longer, or sinks much deeper, suggests the short pause has turned into a new move of its own.
What is the difference between a cup and handle and a rounding bottom?
Both have a curved, gradual base. The cup and handle adds a small pullback after price returns to the old high. A rounding bottom has no handle. Many chart readers see the rounding bottom as the cup alone, before any handle has formed.