Head & Shoulders Pattern

What is it? A reversal pattern beleived to be one of the more common and reliable patterns. It is comprised of a rally ending a fairly extensive advance, followed by a reaction on lower volume. This creates the left shoulder. The head is comprised of a rally up on high volume exceeding the price of the left sholder. And the head is comprised of a retracement to the previous low on light volume. The right shoulder is formed by an up rally which fails to exceed the height of the head. The major downtrend begins when prices break a horizontal line drawn along the bottoms of the previous lows from the left shoulder and head. The pattern can also be inverted at market bottoms.

Added By: Destiny

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