Ticker&TapeThe cup with handle
The cup with handle is the classic growth-stock base. On a chart it looks like a teacup seen from the side: a rounded bowl followed by a small dip, the handle, near the top.
How the pattern forms
The stock has been rising and then starts to correct. The left side of the cup is the decline. The bottom is where selling dries up and the stock moves sideways for a few weeks. The right side is the recovery back toward the old high.
Near the old high, some buyers from the left side are glad to get out at break-even. That selling creates the handle: a short, gentle pullback on light volume. Once those last sellers are gone, the stock can break out through the top of the handle.
The cup
Start with the bowl. A sound cup meets these guidelines:
- Prior uptrend: at least 30% before the base begins.
- Length: 7 to 65 weeks from the left-side high to the breakout. Most last 7 to 25 weeks.
- Depth: usually 12% to 33% from high to low. In a bear market strong stocks can correct up to 40% or 50%.
- Shape: a rounded bottom, a U rather than a V. The rounding shows time spent shaking out weak holders. A sharp V means the stock rushed back without that cleanup.
The handle
The handle is where the pattern earns its name and where most mistakes happen. A good handle:
- Lasts at least 1 week, often 1 to 4 weeks on the weekly chart.
- Forms in the upper half of the cup, ideally above the 10-week line. A handle in the lower half is a sign of weakness.
- Drifts down, or sideways, rather than up. A handle that climbs along its lows does not shake out enough sellers.
- Pulls back about 8% to 12%, and not much more.
- Shows volume drying up, often to well below average near its low.
The pivot and the breakout
The pivot is the highest price in the handle. Ticker&Tape adds $0.10 to it, so a handle high of $80.00 gives a pivot of $80.10. The buy zone runs to 5% above, about $84.10.
On the breakout day, volume should be at least 40% to 50% above its 50-day average, and often much more. A strong close in the upper part of the day's range adds confidence. Check the RS line too: when it is at or near a new high as the stock breaks out, that is a strong sign.
How Ticker&Tape detects it
The platform labels a base a cup with handle when it is 15% to 50% deep and has a handle in the upper half of the pattern. Shallower patterns, up to 15%, are labeled a flat base, and anything deeper than 50% is a deep correction. So a classic 12% to 15% cup may show as a flat base: the pivot logic is the same, so treat it the same way.
The label never replaces your own review. Look at the weekly chart, the volume in the handle and the market direction before you act.
The rules of a cup with handle
| Prior uptrend | At least 30% before the base starts |
|---|---|
| Length | 7 to 65 weeks, most 7 to 25 |
| Depth | 12% to 33%; up to 50% in a bear market (platform: 15% to 50%) |
| Shape | Rounded U bottom, not a sharp V |
| Handle length | At least 1 week |
| Handle position | Upper half of the cup, ideally above the 10-week line |
| Handle action | Drifts down or sideways, 8% to 12% deep, on light volume |
| Pivot | Handle high + $0.10 |
| Buy zone | Pivot to 5% above |
| Breakout volume | At least 40% to 50% above the 50-day average |
Common mistakes
- Buying a handle that forms in the lower half of the cup.
- Accepting a handle that wedges upward along its lows.
- Buying a V-shaped cup that rushed straight back to the highs.
- Buying a breakout on light volume or in a market in correction.
Key points
- A cup with handle is a rounded correction of 12% to 33% with a short handle near the top.
- The handle must sit in the upper half, drift down and show drying volume.
- Buy as the stock clears the handle high on heavy volume, within 5% of the pivot.
On Ticker&Tape today
Live examples from the latest close, updated every trading day. Examples, not recommendations. 2026-10-02
Check what you learned
Answer at least 2 of 3 correctly to complete the lesson.
1. Which handle fits the guidelines best?
A sound handle forms in the upper half, drifts down or sideways, pulls back about 8% to 12% and shows volume drying up.
2. Why is a rounded, U-shaped bottom preferred over a sharp V?
A U means the stock spent weeks letting nervous holders leave. A V means it rushed back to the highs without that cleanup.
3. A classic cup corrected 13% and has a proper handle. How may Ticker&Tape label it, and what should you do?
The platform calls any base 15% deep or less a flat base. The plan does not change: buy near the handle-high pivot on volume.
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