List of Financial Market Terms

A Cup with Handle, also known as a tea cup formation, starts with a rounded bottom (cup) followed by a much smaller rounded bottom (handle).  It can indicate a continuation in price action, or a reversal in trend.

Check out the image from our live trading room:

cup with handle formation example

The rounding bottoms in this example aren't perfect, but it's rare that everything is perfect when utilizing technical analysis on actual charts.  The orange oval represents the first rounded bottom (cup) and the purple oval represents the handle.  The move is measured by obtaining the height from the middle of the cup to the resistance line directly above.  In this case the middle of the cup sits on 99 and resistance resides at 104, giving it a height of 5.  Add 5 to the resistance level after the breakout to get a target measurement of 109.

You will hear this pattern mentioned in any trading system, including a day trading system, options trading system, and futures trading system.

Related terms: wedge, rounding top, rounding bottom, head and shoulders.

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