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Price Action

What Is a Cup and Handle

A cup and handle is a long, rounded fall and climb back to the price the fall started from, followed by a small dip just under that rim and a close over it. This paper shows you a real one drawn from the euro's daily closes between August and December 2023, the teacup the shape is named for, the cup on the daily chart and on the weekly chart, and the timeframe buttons that switch between the two on your platform.

Difficulty
Intermediate
Reading time
5 min
Pages
8
Reviewed by
Saman Rahbar

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The bowl, the dip, the rim

A cup and handle has three parts. The cup is a long, rounded fall and climb back: the euro against the dollar fell from 1.1065 on 10 August 2023 to 1.04479 on 3 October and was back within 50 pips of the rim by 29 November, four months of bowl. The handle is a short dip just under the rim: 1.07229 on 8 December, two weeks. The third part is the close over the rim: 1.11045 on 27 December — a pip being the fourth decimal place, the smallest step most people count in, and the bowl 617 pips deep.

The teacup

The name is a picture, and the picture is exact. The bowl of the cup is the rounded fall and climb back to the rim, the price the fall started from. The handle is the short, shallow dip on the right, after the climb and before the price goes over the top. The proportions matter to the name: a long cup and a small handle. On the euro the bowl took four months and the handle two weeks, and the handle's dip was about half the depth of the bowl.

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