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Stock Market Charts: Head and Shoulders Pattern

What is the Head and Shoulders Reversal Pattern?
-The stock bounces off of the support line three times, making a head and shoulders pattern
-On the first shoulder, the volume is high
-The volume is lower on the uptrend that creates the head
-People are not voting for the stock to go up. This low volume creates the head
-Important to understand: If the stock bounces and hits the support line again (after the last shoulder), the line becomes a resistance line. You want to make sure it doesn’t bounce down again because that would mean the stock is going below the resistance line.
-A three-month pattern is healthier than a two-day chart pattern

How to Trade On the Pattern:
-Typically, people wait to trade until the stock breaks the neckline region and they trade on the downside (if there is enough volume)

#shoulderspattern #headpattern #stockpatterns #stockcharts #stockmarket

Posted at: https://tradersfly.com/blog/stock-market-head-and-shoulders-pattern/

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All of the stocks mentioned in this video along with any other videos we have are opinions and not investment, financial or legal advice. These videos are for general education, information, and entertainment. Do your own due diligence and consult with a registered financial advisor before taking any position since everyone has a different risk tolerance.