A U-shaped cup, a small handle along its rim. The continuation pattern popularised by William O'Neil — the last shake-out after a long round-trip.
Cup and Handle is a continuation pattern composed of a "cup" and a "handle". A long U-shaped round-trip draws the cup, then a small pullback near the right rim creates the handle. Past the rim of the cup, the trend resumes.
The pattern was made widely known by William O'Neil. Introduced as a central setup in his book How to Make Money in Stocks, it became one of the canonical signals observed in growth-stock advances on US equities. The FX market rarely produces it in the same pure form; the pattern has a strong affinity with equity markets.
The essence of Cup and Handle is the structure of "a long round-trip, followed by one final small shake-out, before the real advance begins". Two conditions must be met to identify a genuine instance: the volume signature and the proportional shape. Both have to align.
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