Identification: A cup and handle is a chart pattern used as a technical indicator. It resembles a cup with a handle, where the cup is in the shape of a “U” and the handle has a slight downward drift.
Occurrence: It is identified by daily price movements. It is considered a bullish signal extending an uptrend, and it is used to spot opportunities to go long by the traders.
Study: Technical traders using this indicator should place a stop buy order slightly above the upper trendline of the handle part of the pattern. The cup and handle is considered a bullish signal, with the right-hand side of the pattern typically experiencing lower trading volume. The pattern’s formation may be as short as seven weeks or as long as 65 weeks.