Cup and Handle

A pattern on stock charts that resembles a cup with a handle. This is usually noticed on the daily chart, but can also be observed on the weekly chart.  The stock price first forms a U shape then drifts down on selling, supposedly from investors who are unconfident in the stock. The selling occurs on low volume and then the stock rises and breaks above the top of the U formation, completing a cup and handle.

The cup and handle formation is highly revered by William O’Neil, advocater of the CANSLIM system, which suggests combining fundamental analysis with technical analysis.

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