Inverse cup and handle
A rounded rise and fall shaped like an upside-down cup, followed by a small bounce shaped like a handle.
What it shows
An inverse cup and handle is the mirror image: a gradual rise, a rounded top, and a gradual fall back to near the starting level, followed by a small bounce under the right rim.
It is complete when price closes below the rim level.
How we find it
The same code that draws it on your chart follows these steps, with the same result every time.
- Find a rounded top (a parabola fit) lasting at least 30 bars and at least 12% tall.
- Require the right rim to be within 5% of the left rim.
- Find a handle after the right rim: a bounce of at most one third of the cup height, lasting 5 to 20 bars.
- Mark complete when a close falls below the rim level.
Starting values: Cup height 12% to 35%; Cup length at least 30 bars; Handle height under 1/3 of the cup height; Handle length 5 to 20 bars. These are proposed and will be tuned on real price data before launch.
How to read it
- The blue curve is the upside-down cup.
- The small bounce after the right rim is the handle.
- The dashed line is the rim level.
Status labels you may see
| Label | What it means |
|---|---|
| Cup forming | The rounded top is present, no handle yet. |
| Handle forming | Bounce after the right rim. |
| Broke the rim | Closed below the rim level. |
What cancels it
A close above the highest point of the handle.
What traders check next
- Volume through the handle.
- Whether the dome is rounded or sharp.
- How long the pattern took.
Limits
- Rare.
- Rules are choices.
- Long patterns can mean slow progress.
Try it in forecastviz
- Open any ticker and choose Continuation patterns → Inverse cup and handle in the left menu.
- Switch between 6M, 1Y, 3Y to see how the picture changes.
- Compare with Cup and handle and Rounding top on the same chart.
Questions
Is it common?
Not very. It is less discussed than the usual version.
How is it different from a rounding top?
It adds the handle and the rim.
Related trends
Further reading
- Edwards and Magee, Technical Analysis of Stock Trends
- Bulkowski, Encyclopedia of Chart Patterns
- O'Neil, How to Make Money in Stocks
Educational only. Not financial advice, and not a price forecast. Charts are drawn by code from past price data, which may be delayed.