Cup and Handle

Cup and Handle 

The cup and handle pattern is a technical analysis chart pattern that is used to identify potential buying opportunities in a security. It is formed when the price of a security rises to a new high, pulls back, and then rises again to a similar high before falling back down. The pattern is characterized by a "cup" with a rounded bottom and a "handle" with a downward sloping trendline.

The cup and handle pattern is considered a bullish continuation pattern, as it indicates that the security may be continuing an uptrend. Investors may consider buying the security when the price breaks above the resistance level formed by the handle, as this may signal a continuation of the uptrend.

Source: Stockcharts.com

Inverted Cup and Handle

The inverted cup and handle pattern is a technical analysis chart pattern that is used to identify potential selling opportunities in a security. It is formed when the price of a security falls to a new low, bounces back up, and then falls again to a similar low before rising back up. The pattern is characterized by a "cup" with a rounded top and a "handle" with an upward sloping trendline.

The inverted cup and handle pattern is considered a bearish continuation pattern, as it indicates that the security may be continuing a downtrend. Investors may consider selling the security when the price breaks below the support level formed by the handle, as this may signal a continuation of the downtrend.

It's important to note that chart patterns are just one tool that investors can use to inform their investment decisions and should not be used in isolation. It's always important to consider other factors, such as a company's financial health and market conditions, before making an investment.