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Big Book of Chart Patterns by Trading Tips

Big Book of Chart Patterns by Trading Tips

Author:Trading Tips [Tips, Trading]
Language: eng
Format: epub
Tags: Technical Analysis
Publisher: Riddler
Published: 2019-11-18T00:00:00+00:00


24.

Head & Shoulders (Inverted Continuation)

Directional Bias: Bullish

Pattern Type: Continuation

* * *

Pattern Description: This pattern occurs in the middle of an uptrend and is identified by three-valley formation with the center valley, or low, forming a lower low than the other two. The neckline is a trend-line that is drawn across the intervening highs and should be horizontal or downward sloping to the breakout area. There should be a degree of symmetry between the formation of the two shoulders and the head.

Volume Description: Volume tends to be high leading into the down move of the first shoulder, diminishes as the price rises completing the left shoulder, is balanced during the formation of the head, and expands as the price breaks above the neckline.

Breakout Confirmation: A close above the neckline with above average volume.

Measuring Technique: Measure the distance between the first high to the low of the head, and then add that amount to the neckline on the breakout.



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