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 (forming a small handle) before potentially rising again. You'll see traders watching for this pattern because it's considered a bullish signal—meaning the stock might be about to go up. The idea is that the dip shakes out nervous investors, and the handle represents a brief pause before the next leg up. For example, if TechCorp stock dropped 20%, bounced back to near its old high, then dipped 5% before breaking upward, that could be a cup and handle. It's not a guarantee, but it's one of many patterns traders use to spot potential buying opportunities.