The Cup and Handle Pattern
The cup and handle pattern (or cup with handle pattern) is a continuation pattern that works best in bull markets. This pattern begins with a price advance to new highs (the left top side of the pattern). A sell off ensues which develops into the consolidation phase (the cupping portion) for the stock. The price will then make an attempt at a rally (right side of the cup), which will top out at or before the previous highs of the cup (top left side). There will be one more sell off or shake out of weak holders of the stock. This is the handle phase and represents an important psychological turning point for the stock. Weak holders sell out giving the stock the fuel to move higher and break out of the cup and handle pattern.