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Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

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Picture of Bumper.
Picture of the head's law.
Chart Patterns: After the Buy
Getting Started in Chart Patterns, Second Edition book.
Trading Basics: Evolution of a Trader book.
Fundamental Analysis and Position Trading: Evolution of a Trader book.
Swing and Day Trading: Evolution of a Trader book.
Visual Guide to Chart Patterns book.
Encyclopedia of Chart Patterns 2nd Edition book.

Bulkowski's Cup with Handle

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Candles Chart
Small Patterns
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 04/23/2018
24,449 -14.25 -0.1%
10,621 42.25 0.4%
691 0.20 0.0%
7,129 -17.53 -0.2%
2,670 0.15 0.0%
Tom's Targets    Overview: 04/13/2018
25,300 or 23,400 by 05/01/2018
10,800 or 9,800 by 05/01/2018
670 or 710 by 05/01/2018
7,400 or 6,800 by 05/01/2018
2,750 or 2,600 by 05/01/2018

Written by and copyright © 2005-2018 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

For more information on this pattern, read Encyclopedia of Chart Patterns Second EditionEncyclopedia of Chart Patterns 2nd Edition book., pictured on the right, pages 149 to 163. That chapter gives a complete review of the chart pattern, compared to what is described below.

Some regard the cup with handle as a pattern of exceptional ability. My testing says otherwise. If you follow O'Neil's criteria exactly, you'll find less than 9% qualify. My cups perform nearly as well and substantially more appear. I don't believe O'Neil discovered this pattern but he certainly popularized it in his book, How to Make Money in Stocks.

A cup with handle chart pattern


Important Bull Market Results for Cup with Handle

Overall performance rank (1 is best): 13 out of 23
Break even failure rate: 5%
Average rise: 34%
Throwback rate: 58%
Percentage meeting price target: 50%

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

Cup with Handle Identification Guidelines

The following guidelines are a subset of O'Neil's, but performance is nearly as good and candidates plentiful using this approach.

Price trendUpward leading to the pattern. Price should rise by at least 30% leading to the cup.
ShapeA rounded turn that looks like a cup with a handle on the right.
U-shaped cupThe cup should be U-shaped, not V-shaped.
HandleThe cup must have a handle on the right.
Cup durationFrom 7 to 65 weeks
Handle duration1 week minimum but usually lasts 1 to 2 weeks.
HandleForms in upper half of cup.
CupCup rims should be near the same price level.
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Cup with Handle Trading Tips

Consult the associated figure on the right.

Trading TacticExplanation
Measure ruleMeasure the height from the right cup lip (A) to the lowest valley (B) then multiply by the above “percentage meeting price target.” Add the result to the breakout price (A) to get a target.
Inner cupCups often form within cups (points 1 and 2), so trade the inner cup when price rises above the handle (the dashed green line at point 3).
TrendlineIf possible, draw a down-sloping trendline along the handle peaks. A close above the trendline signals an early buy. I show this as the blue line extending down from point A on the chart to the right.
BuyBuy when price closes above the right cup rim (point A, and the top horizontal red line).
WarningPrice tends to rise 10% or 15% and then reverses, heading down. Sell quickly or you may take a loss.
StopThe handle low (point C) is a good place to put a stop. Raise the stop as price rises.
ContinuationsPatterns that act as continuations of the price trend substantially outperform those acting as reversals.
ThrowbacksThrowbacks hurt performance.
Short handleStocks with handles shorter than the median 23 days show superior post breakout performance.
Volume shapeCups with U-shaped volume tend to perform better post breakout.
Cup with handle measure rule
The Measure Rule
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Adam & Adam double top chart pattern example

Cup with Handle Example

The above figure shows an example of a cup with handle chart pattern. The rise leading to the cup with handle begins at C and reaches the left cup lip at point A. Since this is on the weekly scale, the price chart appears narrower than usual, but price rounds downward forming a cup with the right cup lip at B. The handle lasts a few weeks before price begins moving up. The next week, price rockets upward about seven points.

-- Thomas Bulkowski




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Other Cup with Handle Examples

See Also

Written by and copyright © 2005-2018 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Your dreams have been answered. I'm here.