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Head and Shoulders
Bottom Chart Pattern
The Head and Shoulders Bottom chart pattern is not as reliable as some of the other chart patterns, but it is still a good idea to add it to your arsenal of trading tools. This pattern is a reversal pattern, meaning that it signals the end of a down trend and the beginning of an uptrend. Look at the chart below.
As you can see on the chart, the price made a low before a minor rally, that formed the left shoulder. Then it made a lower low before rallying to form the head. The next low was a higher low, not falling as far as it did when forming the head. This forms the right shoulder. The highs, before and after the head formation, create the neckline when a line is drawn across to connect them. Extend this line on out to the right and it becomes your line of resistance. When price broke through the resistance line it signaled a change of trend.Stock Chart Patterns Can Be Used For:
Stock Trading Strategies
Option Trading Strategies
Day Trading Strategies
Any Time Frame
Shorting Stocks
Buying Calls
Covered Calls
Buying Puts
Selling Puts
Spreads
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