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)
“He sits at the table, head down, the young clear neck exposed,
watching the drugstore sign from the tail of his eye;”
—Muriel Rukeyser (1913–1980)
“... with her shoulders as bare as a building,
with her thin foot and her thin toes,
with an old red hook in her mouth,
the mouth that kept bleeding
into the terrible fields of her soul . . .”
—Anne Sexton (1928–1974)
“The snow, which doth the top of Pindus strew,
Did never whiter shew,
Nor Jove himself, when he a swan would be
For love of Leda, whiter did appear:”
—Edmund Spenser (1552?–1599)