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Finance Dictionary and Glossary of Investment Terms
Cup and Handle
A pattern on bar charts that resembles a cup with a handle. The cup is in the shape of a "U" and the handle has a slight downward drift. The right hand side of the pattern has low trading volume. It can be as short as seven weeks and as long as 65 weeks.As the stock comes up to test the old highs, the stock will incur selling pressure by the people who bought at or near the old high. This selling pressure will make the stock price trade sideways with a tendency towards a downtrend for four days to four weeks... then it takes off. Below is an example of a cup and handle chart pattern:
A pattern on a bar chart that is in the shape of the letter "U" over a period of between 7 and 65 weeks. Once the stock price reaches the second peak of the "U", some technical analysts believe that the price will fall as investors who bought at the previous peak start to sell their shares.