The cup and handle is a bullish continuation pattern. Price carves a rounded bottom — the cup — over weeks or months, then drifts down in a tight, low-volume pullback that forms the handle. The breakout above the handle's resistance is the trigger.
The best cups are U-shaped, not sharp V's. A rounded base implies a gradual, durable shift in sentiment rather than a panic low that may not hold.
A proper handle drifts down on declining volume in the upper half of the cup. If the handle is sloppy, deep, or forms in the lower half, the pattern is weak and prone to failure.
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