Cup and Handle

Cup and Handle

In technical analysis, a price trend that resembles a cup and a handle on a chart. It occurs when the price of a security reaches a high and then takes a U-shaped downtrend and uptrend. This is the cup. When the price approaches its previous high, investors who bought at or near the previous high tend to sell their shares, which causes the price to drop slightly. This is the handle. After the handle "completes," the price of the security tends to increase significantly. Technical analysts view cups and handles as buy signals under the correct circumstances.