Scan 5,000+ stocks daily for William O'Neil cup and handle breakout patterns. Cup depth, handle tightness, and volume profile analyzed. Each setup graded A+ to B.
Run this scan →The cup and handle pattern is one of William O'Neil's most important contributions to technical analysis, first described in his landmark book How to Make Money in Stocks. The pattern forms when a stock declines from a high, carves a rounded bottom (the cup), rallies back to the prior high, and then drifts slightly lower in a brief consolidation (the handle) before breaking out to new highs.
The cup and handle works because it represents a complete cycle of shakeout and re-accumulation. During the cup formation, weak holders who bought near the prior high are gradually flushed out. The rounded bottom — U-shaped rather than V-shaped — indicates a gradual shift from selling pressure to buying pressure, not a sharp short-covering bounce. By the time price returns to the prior high (the lip of the cup), most overhead supply has been absorbed.
The handle serves as a final shakeout. As price approaches the prior high, some remaining holders sell at breakeven, creating a brief dip. The declining volume in the handle confirms that this selling is minor and nearly exhausted. The breakout above the handle on increasing volume signals that all overhead supply has been absorbed and demand is now free to drive the stock to new highs. O'Neil found that the best cup and handle patterns have cup depths of 15-35% and handles that form in the upper third of the cup.
Developed by William O'Neil and first published in How to Make Money in Stocks (1988). O'Neil discovered the pattern through his study of every market-leading stock from 1880 onward, which he compiled into the Model Book of Greatest Stock Market Winners. The cup and handle became the cornerstone pattern of O'Neil's Investor's Business Daily (IBD) methodology and is now one of the most widely recognized accumulation patterns among growth stock traders.
Our scanner evaluates the following criteria when detecting Cup & Handle setups across 5,000+ stocks daily.
For cup & handle patterns, an A+ grade means a U-shaped cup with 15-35% depth, a handle in the upper third with declining volume, and a prior uptrend of at least 30%. This is not a prediction of future price movement — it is a way to prioritize which charts deserve your attention first.
Buy on breakout above the handle's high on volume at least 40-50% above the 50-day average. The handle should show declining volume before the breakout fires.
Place stop below the handle's low or at the midpoint of the cup. O'Neil recommends cutting losses at 7-8% below the buy point regardless of where the handle low sits.
Measure the depth of the cup and add it to the breakout point for the minimum target. The best cup and handle breakouts in strong markets can produce 50-100%+ advances.
This is educational content only. Not financial advice. Always do your own research and manage risk appropriately.