Technical Glossary / Chart Patterns
Inverted Cup and Handle
A rounded top, a decline back to the old low, a small bounce, and a breakdown.
Teaching sketch. It shows the shape, not a live quote and not a trade signal.
Definition
The inverted cup and handle is the bearish mirror. Price rounds over from a high, returns toward the starting low, bounces briefly in a handle, and then breaks down. The handle is a weak rally, not a new uptrend.
How to identify it
An upside-down U, a return to the left-side low, then a short bounce that stalls, then a close under the rim. A handle that rallies all the way back to the high is not a handle.
Bullish reading
A handle that breaks upward and reclaims the dome fails the bearish pattern.
Bearish reading
The trigger is the break of the handle low or the rim. Risk above the handle. It is a distribution shape: the rounded top already showed fading demand.
Common mistakes
Seeing the pattern in every pullback. The cup needs a real rounded top, and the handle needs to stay near the lows.
Limitations
Rounded tops are slow and easy to redraw. Mark the rim before the breakdown so the line is not fitted afterward.
This note explains the term. A sketch shows the shape of the idea. Neither is a recommendation, a signal, or a comment on any security. Indicator settings and exchange conventions differ. Check the live chart and the contract specification before you use a number.