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The "cup and handle" is a bullish technical analysis pattern used in trading to identify potential upward movements in the price of an asset. Here’s a breakdown of the pattern:
Cup
Formation: The "cup" part of the pattern resembles a U-shape. It forms as the asset’s price experiences a rounded bottom after a decline.
Characteristics:
Decline: The left side of the cup represents a drop in price.
Bottom: The bottom of the cup is typically rounded, indicating a gradual shift from sellers to buyers.
Rise: The right side of the cup shows the price rising back up, approaching the previous high.
Handle
Formation: After the cup formation, the price typically consolidates in a small, downward-sloping channel or sideways movement, forming the "handle."
Cup
Formation: The "cup" part of the pattern resembles a U-shape. It forms as the asset’s price experiences a rounded bottom after a decline.
Characteristics:
Decline: The left side of the cup represents a drop in price.
Bottom: The bottom of the cup is typically rounded, indicating a gradual shift from sellers to buyers.
Rise: The right side of the cup shows the price rising back up, approaching the previous high.
Handle
Formation: After the cup formation, the price typically consolidates in a small, downward-sloping channel or sideways movement, forming the "handle."
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