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Tagged: INVERTED HEAD AND SHOULDER
There are three distinct bottoms with the head (middle peak) a bit lower than either of the two shoulders. A decisive close through the neckline is also necessary to complete the pattern.
Graphically head and shoulder should be visible in inverted position.
The volume at head is a bit lighter than that of the left shoulder.
The volume will dip at the right shoulder.
The breakout at the neck line is accompanied by large volume
This trend is similar to the head shoulder, but in an inverted shape, where the bullish trend starts when the price crosses the top of both right and left shoulder.
Inverted head and shoulder pattern indicates accumulation.
Conditions to determine bullish trend are
Volume should be high in left shoulder and low In right shoulder
duration 3 months
when prices start rising beyond neckline, long position can be created.
1) Head should be deeper than two shoulders.
2) Significant price fall before pattern
3) Duration for each pattern should be minimum 1 month.
4) Volume should be highest at left shoulder.
Inverted Head and Shoulder: A chart pattern used in technical analysis to predict the reversal of a current downtrend. This pattern is identified when the price action of a security meets the following characteristics:
Once the final trough is made, the price heads upward toward the resistance found near the top of the previous troughs. Investors typically enter into a long position when the price rises above the resistance of the neckline. The first and third trough are considered shoulders, and the second peak forms the head.
Conditions to determine the bullish trend:
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