![]() ![]() The right shoulder is where things come together. The neckline is also beginning to take shape, but we need the right shoulder before we can draw the neckline on our chart. ![]() But despite the bullish rally, buyers are unable to make a substantially higher low.Īt this point, we have the left shoulder and the head of the structure. Now that the left shoulder has formed, the market makes a higher high which forms the head. At this point, things are starting to come together, but we don’t quite have enough to draw the neckline. The market moves down to form a higher low. This is the extended move higher that eventually leads to exhaustion.Īs a general rule, the longer the uptrend lasts, the more substantial the reversal is likely to be. The very first part of a head and shoulders pattern is the uptrend. Now let’s discuss each step in greater detail. Exclusive Bonus: Download the Head and Shoulders PDF Cheat Sheet that will show you everything you need to know to make money from this reversal pattern.
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