Price reaches the high for the third time and breaks out. Volume must support price action for the new rally to succeed. It searches for candidates that show more participation on up days leading into the breakout than down days. The classic definition also filters volume action within the cup itself. These strict requirements lead swing traders to misunderstand this pattern's power.
Handles can retrace deeply or actually build a base at new highs above the cup.
Volume can break all the rules as the pattern forms but still show excellent accumulation by the time the breakout erupts. And a deep handle may even push toward the low of the cup's bottom before the final rally begins. 3rd Watch seeks the classic pattern but cuts the dimensions in half. The handle language in the scan captures many variations of this complex formation. It only requires that the market print no new high within 4 weeks of the signal.