In technical analysis, the various changes in the prices are examined by price patterns.
when the prices changes in trend direction, it is called as reversal pattern.Mainly used to examine the current market movements and forecast the future moments..
Through this have understood the concepts of pattern formation such as Double top, Double bottom, Flag pattern and triangle pattern.
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@amreentaj
Your analysis is good. Keep going !
I would like to attempt your questions.
Head and shoulder is basically a reversal pattern. The name head and shoulder is so because graphically the pattern resembles two shoulders and a head in between shoulders. The pattern contains three successive peaks with the middle peak (head) being the highest and the two outside peaks (shoulders) being low and roughly equal. The reaction lows of each peak can be connected to form support or a neckline.
The conditions:
1) It takes at least three months for this pattern to form.
2) The left and right shoulders are roughly equal.
3) High volume takes place in the left shoulder (LS)
4) Low volume in the right shoulder (RS) because the stronger hands are already sold out.
5). Short position can be initiated when the price breaks below the neckline.
Thank you so much for the details!