Some analysts call this formation a cup and handle, but the type of trading activity is the same. A market makes a gradual descent, trades at a lower level for a while and then makes a gradual ascent to form a rounding bottom – the saucer or the cup, depending on the name you give this formation. After prices reach the lip on the right side of the saucer (or cup), the market runs into resistance from the lip on the left side and sets back for a short time before moving back up to the lip level, forming the cup (or handle). When prices do pick up enough momentum to break above the lip level, they often do so with rather vigorous market action on higher volume, sometimes leaving a gap at the start of what becomes an extended uptrend.

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