When the inverted cup with handle appears on the chart

In cryptocurrency markets, the inverted cup with handle is a signal that traders looking for short entry points should pay attention to. This formation occurs in declining trend conditions and indicates the possibility of further price drops.

What does this formation look like

Visually, the pattern consists of two stages. The first is a deep bottom in the shape of an inverted “U,” where the price makes a sharp decline. The second stage is a small rally, forming the so-called handle, which serves as the market’s last attempt before a bearish movement develops.

Practical application in trading

The entry point occurs when Bitcoin or other assets break through the lower boundary of the formed pattern (often called the resistance line). It is at this moment that the decline continues.

The target price is calculated by measuring the depth of the cup itself and applying this distance downward from the breakout point. The stop-loss is traditionally set above the handle’s maximum to protect the position from an unexpected reversal.

When does this formation work

In Bitcoin and other cryptocurrency markets, the inverted cup with handle is especially relevant during periods of a pronounced bearish trend. This means that traders who correctly identify this formation have the opportunity to enter the trend at a favorable moment.