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The line chart pattern appears to be inverted head and shoulder,i.e shoulder, head(with lowest bottom) and a shoulder formation is called inverted head and shoulder. Inverted head and shoulder happens due to the accumulation of strong hands.
Condition for bullish:
shoulder, head(with lowest bottom), shoulder formation with in 3 months duration.
volume is high at left shoulder and low at right shoulder and the trend move forward above the neckline.
Inverted Head and shoulder is pattern formed after a down trend.
Conditions to determine the bullish trend :
Left shoulder ->: Price declines and moves higher.
Head -> another Decline occurs to a lower level.
Right shoulder -> Price then moves higher and moves back lower, but not as low as the head.
A trade can be initiated after the pattern is complete and a long position can be created once the right shoulder moves upward breaking the neck line with significant volume.
*Note : Formations are rarely perfect, i.e, there may be some noise between the respective shoulders and head.
The inverted head and shoulder pattern is a accumulation pattern.
– Should have significant rally before the trend.
-period of the trend is 3 months
– left shoulder should have high volume
-head should be high
right shoulder should have no significance in volume
long position can be made after breakout
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