• It follow prior runup of 30% or more;
  • Following the runup, the price correction should see a decline of no more than 35%;
  • The handle forms in the upper part of the base and should correct no more than 5-15%;
  • The base should form over a minimum of seven (7) weeks;
  • The handle should be at least five (5) days long (longer with long bases) and should trend downwards (daily lows decreasing);
  • The handle should form in the upper part of the stock’s base (handle’s low + high price/2 > base’s low + high price/2).


  • The handle sets the stage for a fresh runup;
  • The buy point is high of the handle plus 10 cents (to make sure it is overcoming price resistance).

– Handles occur as some investors who bought at a lower price take profits; it should not be a huge sell-off.
– You want to see below average volume an the handle forms (indicating institutions are not selling).
– If the daily lows in the handle are moving upwards, it is ‘wedging’ which indicates weakness in the pattern (it doesn’t shake out enough of the investors who don’t have conviction in the stock).