10000 Elephants

Cup and Handle Formation

A Cup and Handle formation will have a distinct round bottom forming the cup and then a price channel that forms the handle. The direction of price will depend on the price direction as it breaks out of the handle formation.

In the diagram below, we show a stock that has completed a cup and handle formation with a breakout on the upside. This stock will generally continue higher for at least a few days if not weeks.

If the stock were to breakout on the downside, we would likely see the stock continue to drop in price.