Definition
Cup and Handle forms during uptrends. The cup is a rounded bottom pattern, and the handle is a small consolidation or pullback. Breakout above the handle's resistance continues the prior uptrend. The pattern can take weeks to months to form.
Formula
Price Target = Breakout Point + Cup Depth
Example
A stock drops from $50 to $40 forming the cup, rallies back to $50, then pulls back to $48 (handle). Breaking above $50 targets $60 (cup depth of $10 added to breakout).
FAQ
What is Cup and Handle Pattern?
A bullish continuation pattern resembling a cup with a handle.
How do you calculate Cup and Handle Pattern?
A common formula for Cup and Handle Pattern is: Price Target = Breakout Point + Cup Depth
Why is Cup and Handle Pattern important?
Cup and Handle Pattern helps investors evaluate chart patterns and make more informed decisions.