I happened to see someone discussing the inverted cup and handle pattern, and this classic bearish reversal signal is indeed worth paying attention to. Let me share how to interpret this inverted cup and handle pattern.

Simply put, this pattern looks like an upside-down cup with a small handle. It typically appears at the end of an uptrend and serves as an important warning that the market may reverse downward. The price rises to a peak, then drops sharply, followed by a weaker rebound, forming the inverted U-shaped cup. The key feature is the small handle after the rebound, which does not break above the previous high—this is the core characteristic of the pattern.

From a trading perspective, the real opportunity arises when the price breaks below the support line at the bottom of the cup. This is a sell signal. You can estimate the downside target based on the depth of the cup: the target price is approximately equal to the breakdown point minus the height of the cup. Remember to place your stop-loss above the handle to better control risk.

My experience is that volume must be checked before entering a trade. The larger the volume during the breakdown, the stronger the downward momentum. Also, don’t rush to enter; wait until the pattern is fully formed before acting. The inverted cup and handle pattern can be seen across various timeframes—daily, weekly, or even hourly charts.

Another tip: don’t rely solely on this pattern. Using RSI or moving averages together yields better results, as it helps filter out false signals. Overall, the inverted cup and handle pattern is a strong bearish signal—once confirmed with a breakdown, be prepared for a downward move.