The inverted cup and handle is a bearish chart pattern that can indicate weakening bullish momentum and a potential downward move.
It typically forms after an uptrend. The inverted cup creates a rounded top, followed by a smaller recovery or consolidation known as the handle. A breakdown below the support or neckline can provide confirmation of the pattern.
Traders often combine the pattern with volume, price action and other technical indicators for confirmation. Since chart patterns can produce false signals, proper risk management is important.