What is Head and Shoulder? What are their conditions to determine the bearish trend?

[Leena Nathan]

Head and shoulder is a price pattern .this appears on all times and frames can be used by day and swing traders as well as investors.Entry levels, stop levels and price targets make the formation easy to implement as the chart pattern provides easy to see levels.

• Seen at market tops.
• Formation of the pattern:
  • Left shoulder: Price rise followed by a left price peak, followed by a decline.
  • Head: Price rise again forming a higher peak.
  • Right shoulder: A decline occurs once again, followed by a rise forming the right peak which is lower than the head.
  • Should happen in a period of 3 months

 

[Mohammed Arshath Ali]

• Head and shoulder is one of the price pattern.
• This is a distribution or accumulation pattern.
• Minimum 3 month required between Left shoulder, Head and Right shoulder.
• High volume at Left shoulder and Low volume at Right shoulder.
• Short position can be created below its Neck Line.

[Supriya Rayabhagi]

Head and shoulder is a distribution pattern. It appears as Left Shoulders-Head-Right shoulders.

Conditions to determined bearish trend:

• Left shoulder should have significantly large volume.
• Head should be the highest among the recent price action.
• Duration for the entire pattern to form should be minimum 3 months.
• Right shoulder volume should be as low as possible.
• Treader can create short position when it crosses the neck line.

[Hariesh]

Head and Shoulder is a ageressive buying and selling of stocks if stronger hands but in comparison selling will be higher

Head and Shoulder should has two shoulder and one head

Volume should be high at left shoulder and low at right shoulder

During the right shoulder when it goes below the neck short position can be created

The duration to form head and shoulder is minimum of 3 months

[Shiva]

It is a distribution or accumulation pattern. We have to identify Shoulder – Head – Shoulder where the head is the tallest

It should take min 3 months to qualify the distribution pattern.

To determine the bearish trend

Volume should be high in the left shoulder which shows lot of buying and selling is happening and it is generally due to the intervention of strong hand

The head should be the tallest and when the strong hand has diluted his stock the volume will come down and it is witnessed in the right shoulder.

We can create a short position if the price breaks the neck line as there is no hope for the price to increase.

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