ACADEMY
Forex Cup and Handle Formation Pattern
Welcome to Lesson 11 of Forex Chart Formation Patterns. This lesson covers the cup and handle pattern, a classic bullish continuation formation signaling strong potential for upward price movement. Mastering this pattern gives traders an edge in identifying high-probability breakout setups.
What is the Cup and Handle Pattern?
The cup and handle chart pattern gets its name from its teacup-like shape. It begins with a rounded, U-shaped price movement that forms the cup. This phase shows the market's transition from a bearish pullback to bullish recovery. After the price retests the previous resistance level, it experiences a smaller, downward consolidation that forms the handle.
The handle often slopes slightly downward or moves sideways and represents a final shakeout before the breakout. This structure suggests that early profit-taking is exhausted and buyers are preparing for another push higher.