Head and Shoulders Top
Head and Shoulders formation consists of a left shoulder, a head, and a right shoulder and a line drawn as the neckline. The left shoulder is formed at the end of an extensive move during which volume is noticeably high. After the peak of the left shoulder is formed, there is a subsequent reaction and prices slide down to a certain extent which generally occurs on low volume. The prices rally up to form the head with normal or heavy volume and subsequent reaction downward is accompanied with lesser volume. The right shoulder is formed when prices move up again but remain below the central peak called the Head and fall down nearly equal to the first valley between the left shoulder and the head or at least below the peak of the left shoulder. Volume is lesser in the right shoulder formation compared to the left shoulder and the head formation. A neckline is drawn across the bottoms of the left shoulder, the head and the right shoulder. When prices break through this neckline and keep on falling after forming the right shoulder, it is the ultimate confirmation of the completion of the Head and Shoulders Top formation. It is quite possible that prices pull back to touch the neckline before continuing their declining trend.
Read more about this topic: Head And Shoulders (chart Pattern)
Famous quotes containing the words head and, head, shoulders and/or top:
“Don’t want no money from you Ethan, no money, Marty. Just a roof over old Mose head and a rocking chair by the fire, my own rocking chair by the fire.”
—Frank S. Nugent (1908–1965)
“Gentlemen, no one objects to the husband being the head of the wife as Christ was the head of the church—to crucify himself; what we object to is his crucifying his wife.”
—Susan B. Anthony (1820–1906)
“I have often inquired of myself, what great principle or idea it was that kept this Confederacy so long together. It was not the mere matter of the separation of the colonies from the mother land; but something in that Declaration giving liberty, not alone to the people of this country, but hope to the world for all future time. It was that which gave promise that in due time the weights should be lifted from the shoulders of all men, and that all should have an equal chance.”
—Abraham Lincoln (1809–1865)
“The necessary has never been man’s top priority. The passionate pursuit of the nonessential and the extravagant is one of the chief traits of human uniqueness. Unlike other forms of life, man’s greatest exertions are made in the pursuit not of necessities but of superfluities.”
—Eric Hoffer (1902–1983)