What is a head and Shoulders pattern ?
A head and shoulders pattern is a chat formation in technical analysis that resembles a baseline with three peaks, the outside two are close in height and the middle is highest. A head and shoulders pattern describes a specific chat formation that predicts a bullish to bearish trend reversal. The head and Shoulders pattern is believed to be one of the most reliable trend reversal patterns. It is one of several top patterns that signal, with varying degrees of accuracy, that an upward trend is nearing its end.
The head and shoulders chart pattern is the one of the popular pattern in techanical analysis and easy to spot. That shows baseline with three peaks, among middle one is highest. The head and Shoulders patterns popular for to predict the uptrend is nearing its end.
The head and shoulders pattern forms when a stock profe rises and get decline from certain level and again rises above the former peak to form the nose and then again declines back to the original base. Then, finally the stock.prove rises again but to the level of 1st, initial peak of the formation before declining back down to the base or neckline of chart patterns one more time.
What does a Head and shoulders pattern tell you ?
* after long bullish trends, the price rises to a peak and subsequently declines to form a trough.
* the price rises again to form a second high substantially above the initial peak and decline again.
* The price rises a third time, but only to the level of the first peak, before declining once more.
The middle peak forms head, and the first and last peak forms shoulders. The line connecting the first and middle though is called the neckline.
The limitations of head and shoulders
Like all chart patterns, the ups and downs of the head and shoulders patterns tell a very specific story about the battle being waged between bulls and bears.
The initial park and subsequent decline represent the waning momentum of the prior bullish trend. Wanting to sustain the upward movement as long as possible, bulls rally to push the price back to past the initial peak to reach a new high. At the point, it is still possible that bulls could be reinstate their market dominance and continue the upward trend.
However, once price declines a second time and reaches a point below the initial peak, it is clear that bears are gaining ground. Bulls try one more time to push price but succeed only in hitting the lesser high reached in the initial peak. The failure to surpass the highest high signals the bulls defeat and bear take over driving the price downward and completing the reversal.
In the next article will learn about inverse head shoulders pattern.
"Let's create wealth together"
A head and shoulders pattern is a chat formation in technical analysis that resembles a baseline with three peaks, the outside two are close in height and the middle is highest. A head and shoulders pattern describes a specific chat formation that predicts a bullish to bearish trend reversal. The head and Shoulders pattern is believed to be one of the most reliable trend reversal patterns. It is one of several top patterns that signal, with varying degrees of accuracy, that an upward trend is nearing its end.
The head and shoulders chart pattern is the one of the popular pattern in techanical analysis and easy to spot. That shows baseline with three peaks, among middle one is highest. The head and Shoulders patterns popular for to predict the uptrend is nearing its end.
The head and shoulders pattern forms when a stock profe rises and get decline from certain level and again rises above the former peak to form the nose and then again declines back to the original base. Then, finally the stock.prove rises again but to the level of 1st, initial peak of the formation before declining back down to the base or neckline of chart patterns one more time.
What does a Head and shoulders pattern tell you ?
* after long bullish trends, the price rises to a peak and subsequently declines to form a trough.
* the price rises again to form a second high substantially above the initial peak and decline again.
* The price rises a third time, but only to the level of the first peak, before declining once more.
The middle peak forms head, and the first and last peak forms shoulders. The line connecting the first and middle though is called the neckline.
The limitations of head and shoulders
Like all chart patterns, the ups and downs of the head and shoulders patterns tell a very specific story about the battle being waged between bulls and bears.
The initial park and subsequent decline represent the waning momentum of the prior bullish trend. Wanting to sustain the upward movement as long as possible, bulls rally to push the price back to past the initial peak to reach a new high. At the point, it is still possible that bulls could be reinstate their market dominance and continue the upward trend.
However, once price declines a second time and reaches a point below the initial peak, it is clear that bears are gaining ground. Bulls try one more time to push price but succeed only in hitting the lesser high reached in the initial peak. The failure to surpass the highest high signals the bulls defeat and bear take over driving the price downward and completing the reversal.
In the next article will learn about inverse head shoulders pattern.
"Let's create wealth together"
No comments:
Post a Comment