Cup and Handle

A Cup and Handle is a chart pattern where a stock's price dips down and recovers (forming a U-shape like a cup), then pulls back slightly (the handle) before potentially breaking upward. You'll see this pattern in price charts when traders are analyzing whether a stock might rally. It matters because many traders believe it signals a good buying opportunity—the idea is that the dip shook out nervous sellers, and the handle consolidation shows strength before the next move up. For example, if TechCorp stock dropped 20%, climbed back to near its old high, then dipped 5% before surging higher, that could look like a cup and handle. Keep in mind: past patterns don't guarantee future results, and this is just one tool among many.