Cup and handle

Chart patterns · Intermediate → Advanced · 6 min read

You will learn to

The rounded base and the handle
Where it confirms and where it fails
Why a famous pattern still needs testing

The shape

A cup: a decline and a recovery back to the same level, with a rounded bottom — price spends time basing near the low instead of snapping back in a V. Then a handle: a short, shallow pullback just under the right rim, where the last sellers (people who bought the old high and want out at breakeven) get absorbed. A close above the rim confirms it; the measured move is the cup's depth added to the rim. The inverse cup and handle is the mirror at tops.

Rules used here

Rims at about the same height, 20–160 candles apart; cup at least 3 ATR deep.
Rounded: the bottom sits near the middle, at least a fifth of the cup is spent in its lower third, and both sides climb gradually (no one-candle spike back to the rim).
Handle: a pullback of at least 0.5 ATR that stays in the cup's upper half and lasts no longer than half the cup.
Confirmation: a close above the right rim. Stop below the handle's low.

How it fails

The handle digs into the lower half of the cup — demand was not as strong as the cup suggested.
The break above the rim is a sweep of the obvious equal highs and closes back inside.
The handle drags on: the longer it lasts, the more it is just a range.

What our backtest found

4H, unseen 2024–26: +0.08R per trade over 75 trades (95% range −0.23 to +0.38) with the stop below the handle — while random entries with the same stop made +0.04R. The first half of the period lost (−0.22R), the second made money (+0.36R). No edge: it is shown on the chart but is not part of the tested pattern set or the bot.

Check yourself

1. What separates a cup from a simple V-shaped rebound?

Its colour
A rounded base: price spends time near the low ✓
Higher volume at the bottom only

Time spent basing is the point of the cup.

2. Where is a cup and handle confirmed?

At the cup bottom
On a close above the right rim ✓
At the handle low

Before that it is a base with a pullback.

3. What did NexusCore's test find for cup and handle on 4H?

A strong edge
No edge — about the same as random entries ✓
It always fails

+0.08R vs +0.04R for random entries with the same stop, on 75 trades, with the two halves disagreeing.

Terms in this lesson

Cup and handle: A rounded base between two equal rims, then a shallow handle; confirms above the rim.

Practise it on real charts. In the app, this lesson comes with real examples (reveal what happened next), a graded drill and the track test. Open the Academy in NexusCore — free →