Usage As A Tool
Head and Shoulders is an extremely useful tool after its confirmation to estimate and measure the minimum probable extent of the subsequent move from the neckline. To find the distance of subsequent move, measure the vertical distance from the peak of the head to the neckline. Then measure this same distance down from the neckline beginning at the point where prices penetrate the neckline after the completion of the right shoulder. This gives the minimum objective of how far prices can decline after the completion of this top formation.
If the price advance preceding the Head and Shoulders top is not long, the subsequent price fall after its completion may be small as well.
Read more about this topic: Head And Shoulders (chart Pattern)
Famous quotes containing the words usage and/or tool:
“...Often the accurate answer to a usage question begins, “It depends.” And what it depends on most often is where you are, who you are, who your listeners or readers are, and what your purpose in speaking or writing is.”
—Kenneth G. Wilson (b. 1923)
“One of the great reasons for the popularity of strikes is that they give the suppressed self a sense of power. For once the human tool knows itself a man, able to stand up and speak a word or strike a blow.”
—Charles Horton Cooley (1864–1929)