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Head and Shoulders Bottom (Reversal) - ChartSchool - StockCharts

Head and Shoulders Bottom (Reversal) - ChartSchool - StockCharts

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18/2/2014 Head and Shoulders Bottom (Reversal) - ChartSchool - StockCharts.com 1/5 StockCharts.com - ChartSchool Learn more about Technical Analysis and Charting Terminology You are here: StockCharts.com » ChartSchool » Chart Analysis » Chart Patterns » Head and Shoulders Bottom (Reversal) Advertisement Head and Shoulders Bottom (Reversal) The Head and Shoulders Bottom, sometimes referred to as an Inverse Head and Shoulders, is a pattern that shares many common characteristics with its comparable partner, but relies more heavily on volume patterns for confirmation. As a major reversal pattern, the Head and Shoulders Bottom forms after a downtrend, and its completion marks a change in trend. The pattern contains three successive troughs with the middle trough (head) being the deepest and the two outside troughs (shoulders) being shallower. Ideally, the two shoulders would be equal in height and width. The reaction highs in the middle of the pattern can be connected to form resistance, or a neckline. The price action forming both Head and Shoulders Top and Head and Shoulders Bottom patterns remains roughly the same, but reversed. The role of volume marks the biggest difference between the two. Generally speaking, volume plays a larger role in bottom formations than top formations. While an increase in volume on the neckline breakout for a Head and Shoulders Top is welcomed, it is absolutely required for a bottom. We will look at each part of the pattern individually, keeping volume in mind, and then put the parts together with some examples. 1. Prior Trend : It is important to establish the existence of a prior downtrend for this to be a reversal pattern. Without a prior downtrend to reverse, there cannot be a Head and Shoulders Bottom formation. 2. Left Shoulder : While in a downtrend, the left shoulder forms a trough that marks a new reaction low in the current trend. After forming this trough, an advance ensues to complete the formation of the left shoulder (1). The high of the decline usually remains below any longer trend line, thus keeping the #WHIPIT with Pantene Stand strong and Shine Put An End To Labels Against Women. by PantenePhilippines on YouTube
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18/2/2014 Head and Shoulders Bottom (Reversal) - ChartSchool - StockCharts.com 2/5 downtrend intact. 3. Head : From the high of the left shoulder, a decline begins that exceeds the previous low and forms the low point of the head. After making a bottom, the high of the subsequent advance forms the second point of the neckline (2). The high of the advance sometimes breaks a downtrend line, which calls into question the robustness of the downtrend.
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  • Spring '12
  • RamonBrunoTulibasJr.
  • shoulders, Chaikin Money Flow, Shoulders Bottom

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