Traders will commonly observe the teacup forex pattern or cup and handle pattern in small time frames and large time frames. When a downward price wave occurs and is followed by a stabilizing period, the teacup pattern will emerge. The prices will also be noticed rallying to near equal size before a decline happens. As the name implies, a u-shape or cup in the teacup pattern will form. After the u-shape pattern forms, the handle will follow when the price moves sideways or drifts downward. Keep in mind that the handle may take the shape of a triangle.

The teacup forex pattern, also known as the cup and handle pattern, is a technical analysis chart formation used to identify potential bullish continuations in the forex market. It resembles the shape of a teacup, with a rounded "cup" followed by a smaller "handle." The pattern forms when an asset experiences a downtrend, then gradually curves upwards, forming the cup. After the cup, a slight downward consolidation creates the handle. A breakout above the handle's resistance indicates a potential upward price movement. Traders look for this pattern to enter long positions, anticipating that the currency pair will continue to rise. The teacup pattern is valued for its reliability and ability to signal strong buying opportunities in forex trading.