Cup and Handle Pattern

• The cup must be U-shaped (not V-shaped) and it must have a handle. Cups without handles are a different chart pattern known as "rounded bottoms";
• Generally, cups with longer and more "U" shaped bottoms, the stronger the signal.

• It should also be noted that the the handle should not dip below the cup mid-point. If it does, the pattern is invalidated;
• Shorter handles (timewise) tend to produce higher gains, though as mentioned, the sample size is too small to verify this result statistically;
• Cups with higher right lips perform better than cups with higher left lips or equal lip heights. This result is statistically significant;
• The most likely gain is approximately 15% after a breakout;

How to trade:

Measure the move - Calculate the height of the formation in pips by subtracting the low at the cup bottom from the high at the lip (preferably the right lip). Divide this difference by 2 in order to get the half-height of the cup. Add this result to the high at the right lip where the breakout occurs and the resulting number will be our target. 

Some traders prefer to use the full height as the target.