Cup and Handle
A rounded base followed by a smaller, shallower pullback near the prior high, resembling a cup with a handle.
How it is identified
Test: a rounded recovery to near the prior high, then a shallow consolidation typically retracing less than a third of the cup's depth
Unit
qualitative
In depth
The formation was popularised by growth-stock traders and its two parts serve different purposes in the story: the cup represents supply being absorbed, the handle a final shakeout before the prior high is tested. Its main practical merit is that it supplies a defined entry level and a defined stop below the handle, which makes the risk on any attempt explicit and small relative to the structure. The usual failure is treating any rounded recovery as a cup, since the handle depth condition is what separates the pattern from an ordinary rally. Nothing in identifying it forecasts a breakout, and this entry makes no such claim.
Worked example
A cup from ₹534 down to ₹420 and back to ₹528 is ₹114 deep. A handle retracing to ₹500 is 28 / 114 = 25% of the cup, within the conventional one-third limit; a pullback to ₹470 would be 51% and would not qualify.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Cup and Handle” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.