I've noticed that many traders do not pay enough attention to one of the most reliable patterns in technical analysis. It’s the cup with handle — a pattern that often precedes a significant price increase.

In general, the cup with handle pattern belongs to bullish continuation patterns. It forms quite simply: first, the price drops sharply, then enters a consolidation phase, creating a rounded U-shaped form. This is the cup itself. After the price touches the bottom of this U-shaped figure, a small rebound upward begins, forming the so-called handle. The handle usually accounts for about a third of the cup's size and has a clear resistance level.

How to recognize it correctly? First, look for that rounded letter U with a smooth curve on the chart. This indicates a consolidation period after a significant decline. The bottom of the cup should be wider and shallower than the edges — this creates the characteristic cup shape. Second, after the cup forms, wait for the handle to appear — a smaller upward-sloping curve. It will have a resistance level at the top.

The most important part is the breakout. When the price breaks through the resistance level of the handle, it’s a signal to act. Usually, such a breakout is accompanied by a sharp increase in trading volume, confirming the seriousness of the move. This indicates that the previous upward trend will continue, often with a substantial rise.

Why does this pattern work? It’s due to market psychology. The cup with handle shows a period when the market stabilizes after a decline, creating a strong support level. When the price breaks through the handle resistance, it confirms that buyers have taken control, and sellers can no longer push the price down.

For traders looking for entry points into long positions, this is one of the most reliable signals. But remember: like any technical tool, it’s best to use the cup with handle pattern in combination with other indicators and fundamental analysis. Don’t rely solely on one figure — a comprehensive approach yields much better results.