Head and shoulder is a 'inversion design' in which the value pattern either changes from bearish to bullish or bullish to bearish and takes a shape that seems as though a human head with shoulders on one or the other side as demonstrated in the line diagram underneath. It usually occurs on a chart of a stock or an index when its on the peak and is starting to make a decline.
Volume is a vital factor to take a gander at when one investigates this example. Volume is most elevated and regularly develops the left shoulder as the upturn proceeds and an ever increasing number of traders need to get in, while it is least on the right shoulder as traders sense a pattern inversion. This low volume is regularly viewed as a solid indication of inversion. In the head bit of the example, volume lies somewhere close to that on the left shoulder and right shoulder.
The head and shoulders design has another variety, called reverse head and shoulder, which appears as though the opposite of the head and shoulders design. Head and shoulders base or backwards has three low pinnacle value made by a falling stock/file.
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