- Cup with Handle
To qualify a continuation pattern, a prior trend should exist. Ideally the trend should be a few months old and not too mature. The more mature the trend, the less change that the pattern makes a continuation or the less upside potential.
Cup: The cup should be 'U' shaped and resemble a bowl or rounding bottom a 'V' shaped bottom would be considered too sharp of a reversal to qualify.
Handle: After the high forms on the right side of the cup, there is a pullback that forms the handle sometimes this handle resembles a flag or pannant that slops downtrend, other times just a short pullback. the handle represents the final cups advance.
Flags: The flag and pennants formation are quite common. They are usually treated together because they are very similar in appearance, tend to show up at about the same place in an exciting trend, and have the same volume and criteria.