The handle is a drop in prices after the right side of the lip of the cup has been reached. The handle can have a variety of shapes and can consist of double handles and high handles. As long as the price does not fall back through the 200 day moving average in forming the handle, the expectation for the pattern is for prices to rise after completion of the handle. The cup and handle formation is uncommon and forms over various time spans. The resulting market activity should never be taken for granted as there is much variety in the psychological settings, economic trends and fundamentals that produce price action on the market.
Volume is usually light in forming the right side of the cup.
Selling pressure is typically present as those investors who bought into the security as the left side peak occurred, sell into the rising trend of the right side of the cup and this often leads to the formation of the handle. When the enthusiasm of selling during the formation of the handle translates into price, there is evidence for the success or failure of the resulting trend after the handle is fully formed. Light selling during the handle formation leads to a higher potential for prices after the cup and handle formation is complete. If prices fall below the 200 day moving average during the formation of the handle then subsequent upside handle breakout is suspect. A breakout from the handle formation is usually accompanied by rising volume and is a positive sign for a continuation of the trend in the direction of the breakout.