Swing traders then enter new short sales when price approaches the double top test. This contributes to fresh selling pressure and forces price to pull back again. It eventually reaches support while indicators recover from oversold levels. Longs then sense a new opportunity and build volume back toward the old highs. This forms a handle base that discourages further selling and builds accumulation.
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.