A worked example that explains the rule, not a stock price. The circle marks the first close beyond the level. The blue line is the target. The orange line is the invalidation. Prices are in the right-hand column, and sessions sit under the volume bar.Hollow green candles closed above their open, and filled red candles closed below it.
Numbers in the example chart
From the same calculation that draws the shape and writes the "Measuring the target" section below.
Trigger level
$100 · at the close of session 73
Target
120$
Invalidation
95$
Pattern height
20$
Chart span
90 sessions
What it is
A long rounded bottom (the cup) followed by a short, tight pullback (the handle), then a breakout. The cup wears down sellers, and the handle tests the last of them.
CupA rounded bottom the letter U, not V · a sharp bottom is panic, not absorption, and it succeeds less often.
RimThe resistance level that will be broken.
The handleA shallow pullback in the upper third. If it drops into the lower half, the pattern fails: it is no longer a pullback but selling.
BreakoutAbove the rim on high volume · the target is the cup's depth added to it.
Recognition rules
An earlier uptrend leads into the cup.
The cup bottom is rounded, not sharp · the letter U, not V.
Depth is usually 12% to 33% from the peak · deeper is weaker.
The handle is a shallow pullback in the upper third of the cup.
The breakout above the cup rim on high volume.
Measuring the target
The cup's depth is added to the rim level: a rim at $100 and a bottom at $80 ⇐ a target of $120.
Where it fools you
A handle that drops into the lower half of the cup invalidates the pattern · it is no longer a pullback but real selling. A sharp cup bottom (V) means panic, not absorption, and it succeeds less often.
Open the daily timeframe for any symbol and draw the pattern yourself. Your drawing is saved per symbol in your browser, and the terminal does not name or detect the pattern.
━ LevelCup rim
⇕ MeasureTarget equals pattern height
We do not detect chart patterns with a numeric rule: telling them apart takes judgment on the chart. Candlestick patterns with a numeric rule are detected daily by the candlestick pattern scanner.
The mirror image: the inverted cup and handle
The same pattern turned upside down, with the same rules in the opposite direction: what was a top becomes a bottom, and the trigger, target and invalidation all flip direction.
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