Head and Shoulders Bottom
This formation is simply the inverse of a Head and Shoulders Top and often indicates a change in the trend and the sentiment. The formation is upside down in which volume pattern is different than a Head and Shoulder Top. Prices move up from first low with increase volume up to a level to complete the left shoulder formation and then falls down to a new low. It follows by a recovery move that is marked by somewhat more volume than seen before to complete the head formation. A corrective reaction on low volume occurs to start formation of the right shoulder and then a sharp move up that must be on quite heavy volume breaks though the neckline.
Another difference between the Head and Shoulders Top and Bottom is that the Top Formations are completed in a few weeks, whereas a Major Bottom (Left, right shoulder or the head) usually takes a longer, and as observed, may prolong for a period of several months or sometimes more than a year.
Read more about this topic: Head And Shoulders (chart Pattern)
Famous quotes containing the words head and, head, shoulders and/or bottom:
“Thus do I want man and woman to be: the one fit to wage war and the other fit to give birth, but both fit to dance with head and feet.”
—Friedrich Nietzsche (1844–1900)
“In my day, we didn’t have the cocaine, so we went out and knocked somebody over the head and took the money. But today, all this cocaine and crack, it doesn’t give kids a chance.”
—Barry White (b. 1944)
“If I have seen further [than certain other men] it is by standing upon the shoulders of giants.”
—Isaac Newton (1642–1727)
“There is more of good nature than of good sense at the bottom of most marriages.”
—Henry David Thoreau (1817–1862)