How to read a Cup and Handle
A cup and handle is a rounded dip and recovery back up to an earlier high, followed by a small pullback before the breakout. The name comes from the shape: a U-shaped cup with a short handle off the right side. It's usually described on daily charts, but the same shape shows up intraday all the time.
What it looks like
The cup should be rounded, not a sharp V. A gradual bottom means sellers wore themselves out slowly and buyers took over without a panic. The right side climbs back to roughly the same level as the left rim.
Then price pulls back a little to form the handle. A good handle is small, drifts down on light volume, and stays in the upper half of the cup. It shakes out the people who bought near the old high and wanted out at breakeven.
How traders read it
The entry is the break above the top of the handle. The stop normally goes under the handle's low, which keeps the risk small compared to the size of the whole pattern.
For a target, measure the depth of the cup from its rim to its bottom and add that to the breakout. On a 1-minute chart the whole thing might take an hour or two to form, so be patient with it.
When it fails
A handle that sinks deep into the cup is the most common problem. If it gives back more than half of the cup's recovery, the buyers who built the right side aren't holding.
A sharp V-shaped cup is less trustworthy than a rounded one, and so is a handle that keeps going sideways for longer than the cup took. Both can still work, but they break more often.
Practice it
There are a lot of confirmed examples above, which makes this a good one to drill. Replay a few in a row. Try to spot the cup before the handle forms, then plan the entry and stop before the breakout.
Educational content only, not trading advice. Patterns describe what price did, not what it will do next.