Head and shoulders top formation and selling skills financial management tips tips Bar

Category: Money tips Release Date: 2006-10-19

Head and shoulders reversal pattern in the stock market the most important and most common one, once it is formed, the accuracy of the high lethality is particularly large. Especially the head and shoulders neckline top in the operation is very important. The one hand it is important to support line, on the other hand, once broken, to form a strong resistance. Technology is generally believed that, if the stock price down more than 3% below the neckline, and there is a large volume release, in order to effectively break and if we have a breakthrough, the stock will take a long time bear.

Head and shoulders top pattern formation

Put simply, head and shoulders pattern has three high points, the middle one higher than the other two high points, similar to the shape of head and shoulders, while the declining volume, so that head and shoulders top. In particular, head and shoulders formation through three stages.

First of all, stock prices rise over time, with the volume constantly zoom in, and accumulated a huge profit plate, so, some investors chose be secured, resulting in lower prices. However, when stock prices fall, trading volume has been reduced. At this time, head and shoulder formation of the top left shoulder first.

Second, when stock prices fall finishing period of time, some investors to buy again, so stock to re-up, volume also will be re-amplification. However, this high turnover significantly reduced compared with the left shoulder. At this time, breaking the previous high prices, investors sold off, leading to another drop in stock price, trading volume is also reduced during the period in the fall. At this time, the head shape.

Finally, when the stock fell to near lows last fall when the stock price to obtain support. However, because those who chase the high buying less volume than the left shoulder and head greatly reduced, the share price is not the same as the last time they broke down his head high, so part of the formation of the right shoulder.

If the second drop of the low short-term link with a straight line can be drawn the top of the head and shoulder neckline, as long as below neckline support, head and shoulders pattern is formally formed.

Head and shoulders top selling techniques

In general, take the lead shoulder was broken up when the top of the neckline is the sell signal. However, any form of a technology are not omnipotent. Head and shoulders top pattern is the same. Investors in the use of time, in conjunction with the average judged, so that you can shape to some extent prevent misled by a false break.

Simply put, the head and shoulder top selling techniques, we should grasp the following points:

Head and shoulders top formed, if the stock price down below the right shoulder neckline bit position, while the stock short-term moving average (5, 10, 20, etc.) showing short order, investors should be highly vigilant.

If the share price down below the neckline bit later, although the present short-term moving average short order, but in the long-term averages (60 day, 120 days, 250 days, etc.) there is strong support for stock prices, investors may wait and see, or sell some shares, a good position control.

If the stock continues to fall below the long-term average, investors sell the stock should be firmly clearance.

At the same time, the share price fell below the neckline, if the volume down low, tend to produce a Fan Chou, investors can seize this opportunity to sell the stock.

In addition, the head and shoulders top pattern but also with MACD indicator, KDJ indicators of the sell signal to apply.