Cup and Handle Chart Pattern: How To Use It in Crypto Trading

The cup and handle indicator is a technical pattern found on crypto price charts. It indicates the correction of a previous uptrend and eventually signals its resumption. The pattern exhibits clearly defined entry and risk levels but can be difficult to interpret in crypto markets due to fragmented volume metrics.

This trading guide explains the importance of the patterns and how you can formulate a strategic trading style to make the best out of it. We’ll be discussing the ins and outs of the indicator and to help you understand some of the limitations. 

What Is a Cup and Handle Pattern?

A cup and handle pattern is a consolidation chart pattern signaling bullish in which prices correct a portion of a previous uptrend, then rebound back toward the previous high, forming the “cup.” Prices then trade sideways, creating the “handle” which, when completed, signals a breakout to new highs.

The pattern was popularized by William O’Neil in his 1988 book, How to Make Money in Stocks. I learned to trade stocks 20 years ago using his methods, including the cup and handle pattern. This pattern is found a lot in the stock market and is beginning to appear frequently within the crypto market.