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Cup and Handle

The Cup and Handle pattern was developed by William O'Neil. This is a strong bullish continuation pattern resembling a cup with a handle.

Cup bottomHandleCUPRounded bottom, 2 equal shouldersCup & Handle: Rounded bottom + Small handle → Break → Continue rise

Pattern Details

Category

continuation

Success Rate

88%

Average Move

+25%

Duration

2-6 months

Pattern Structure

Pattern Structure
Key components that define this chart pattern
  • 1
    Cup portion: U-shaped, lasting 1-6 months
  • 2
    Handle portion: Minor pullback, lasting 1-4 weeks
  • 3
    Breakout point: Price exceeds handle high

Trading Rules

Trading Rules
Essential rules for trading this pattern successfully
  • ✓
    Enter position when price breaks above resistance line
  • ✓
    Volume should increase strongly on breakout
  • ✓
    Target = Depth of the cup
  • ✓
    Stop loss placed below handle
Trading Tips
  • Handle should not be lower than 1/3 of cup
  • Cup portion should be U-shaped, not V-shaped
  • Breakout with high volume is a strong signal

Statistics

Breakout Statistics
Bullish Breakout88%
Bearish Breakout12%
Performance Metrics
Average Rise+25%
Average Decline-0%
Pullback Rate5%