Stock Market Charts: Head and Shoulders Pattern
-The stock bounces off of the support line three times, making a head and shoulders pattern
-On the first shoulder, the volume is high
-The volume is lower on the uptrend that creates the head
-People are not voting for the stock to go up. This low volume creates the head
-Important to understand: If the stock bounces and hits the support line again (after the last shoulder), the line becomes a resistance line. You want to make sure it doesn’t bounce down again because that would mean the stock is going below the resistance line.
-A three-month pattern is healthier than a two-day chart pattern
How to Trade On the Pattern:
-Typically, people wait to trade until the stock breaks the neckline region and they trade on the downside (if there is enough volume)
#shoulderspattern #headpattern #stockpatterns #stockcharts #stockmarket
Posted at: https://tradersfly.com/blog/stock-market-head-and-shoulders-pattern/
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