Cup and Handle
A bullish chart pattern resembling a teacup with a handle, where the price forms a rounded bottom (cup) followed by a small downward drift (handle) before breaking out.
Explained Simply
The cup and handle is one of the most reliable bullish continuation patterns, popularized by William O'Neil in his book "How to Make Money in Stocks." The cup forms as a stock pulls back, rounds out at a bottom, and recovers to its prior high — this typically takes 7 to 65 weeks. The handle forms as a brief pullback (usually 1-4 weeks) on lighter volume from the right side of the cup. The breakout occurs when price moves above the handle's high with strong volume. The pattern's price target is typically the depth of the cup added to the breakout point. Cup and handles work best in uptrending markets and on stocks with strong fundamentals. Failed breakouts can occur if volume doesn't confirm or if the broader market is weak.
How Tradewink Uses Cup and Handle
Tradewink's StrategyEngine identifies cup and handle patterns using price action analysis over multi-week timeframes. The AI looks for the characteristic rounded bottom with declining-then-increasing volume, followed by a low-volume handle pullback. When a breakout from the handle occurs with volume confirmation, the system generates a buy signal with a price target based on the cup's depth and a stop-loss set below the handle's low.
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See Cup and Handle in action
Tradewink uses cup and handle as part of its AI trading signal pipeline. Start getting signals that use this concept to find real opportunities.