Head and shoulders stock price reversal patterns of the four important Money Tips

Category: Money tips Release Date: 2007-04-22

Head and shoulders top is to link the daily K-line, one formed after the graphics. It said the stock will reverse the decline. Head and shoulders top, by definition, there is this head has shoulders, but to head for the top.

î—?î—?head and shoulders top formation of K-line diagram of four steps:

î—?î—?(1) stock prices have a strong upward trend, rising after some distance, there has been a large volume, the price rise. Then again there was a secondary drop in volume at this time up to the vertex than its much smaller volume, so would constitute a "left shoulder."

î—?î—?(2) Subsequently, the stock price began to rebound from the low of the left shoulder, another under the impetus of high-volume stock up to peak even higher than the left shoulder of the price level, create another new high. Then prices will drop back to near the previous fall near the bottom. Sometimes higher, sometimes lower, but in any case, always lower than the left shoulder peak. This has created a "head."

î—?î—?(3) stock price and from the head to bounce off, forming the third time up, playing up high near the left shoulder, and its volume is less than the left shoulder or head high point of the volume, it can not fall in another to reach the level before the birth of the head, which formed a "right shoulder."

î—?î—?(4) Finally, the price has been high from the right shoulder down, falling, pierced by the left shoulder, head, right shoulder is connected to a low neckline. And the closing price in the neckline under a distance of about 3% of market value, which is then formed a "head and shoulders," K-line graph.

î—?î—?With the "head and shoulders" pattern completion, reversal of the stock market decline will start. But usually, after the completion of a breakthrough the neckline, there is still a bounce upward, (Figure), but failed to exceed the pressure of the neckline, this time as a short opportunity to escape, generally known as the escape line, which was a key moment is important to note, investors should own shares at this time, all sold.