Before A the neckline was a resistance line. Once it was
broken the resistance line turned into a support line. At points В and С the price bounced off it twice. The neckline was broken in point D and the trend reversed. A retest took place at point E.
The neckline was a resistance line again. The resistance point held, and the price declined to the level of F, the price target of the head and shoulders formation.
In an uptrend Left Shoulder represents a correction. If it
takes place — traders may take profits. Trend is still intact.
The Head indicates: that prices move up and surpass the
high of the left shoulder (Climax), but then move down again.
This places the upward trend in question.
Rieht Shoulder represents a retest. Buvers re-emerge and
price starts to go up again. If price moves up to the same level of the left shoulder or if it retraces 50% from the Head to the ootential neckline — the rieht shoulder is complete. It is an indication that a down trend is in place.
There are various analysis regarding the role volume plays
with Head and Shoulder patterns. In an uptrend some maintain that the left shoulder carries the hiehest volume, that volume, decreases at the Head and then falls substantially by the right shoulder. Others maintain that the volume is highes at the Head and has a greater decline in the right shoulder.
When the market moves out of a Head and Shoulders
pattern to the upside, it must have high volume.
au
to 'bounce off -
- отскакивать
a.
'target
- цель, точка движения цены
