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Investing Glossary:
Head & Shoulders Pattern
Copyright 2010,
Campbell R. Harvey. All Rights Reserved.
Do not reproduce without explicit permission.
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| This can also be inverted. It is a reversal Pattern And it is one of the more common and reliable patterns. It is comprised of a rally which ends a fairly extensive advance. It is followed by a reaction On less volume. This is the left shoulder. The head is comprised of a rally Up on High volume exceeding the price of the previous rally. And the head is comprised of a Reaction down to the previous Bottom on light volume. The Right shoulder is comprised of a rally up which fails to exceed the height of the head. It is then followed by a reaction down. this last reaction down should Break a horizontal line drawn along the bottoms of the previous lows from the left shoulder and head. This is the Point in which the major decline begins. The major difference between a head and shoulder Top and bottom is that the bottom should have a large burst of activity on the breakout.
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