Head and Shoulders
The head and shoulders pattern is a
reversal pattern. It can be recognized in up trending markets. The following
is the general trend of a head and shoulders pattern:
1. Sellers come in at the highs
(left shoulder) and the downside is probed. The neckline also begins here.
2. Buyers return to the market and push the price to new highs forming the
3. The new highs are then turned back continuing the neckline.
4. Tentative buyers emerge again failing to create new highs and the right
shoulder is formed.
5. Sellers then take over breaking the neckline and a new down trend