Cup and Handle
A ‘cup and handle’ is a bullish indicator that looks like a cup with a handle on the right side when viewed on price charts.
This technical indicator, where the price movement resembles a ‘cup’ followed by a downward trending price pattern known as the ‘handle’, usually signals a buying opportunity: When the downward-trending price formation is over, the price may reverse course and reach new highs.
As shown in the name, there are two parts to this pattern: The cup should show a U-shaped bottom, not a V-shaped bottom, to qualify as a cup and handle. The longer and rounder the bottom, the stronger the bullish signal. Additionally, the volume traded should decrease as the bottom is forming but increase when the price begins rebounding from the bottom.
Key Takeaway
In relation to price charts, a ‘cup and handle’ is a bullish technical indicator that looks like a cup with a handle on the right side when viewed on the charts.