INVERSE HEAD AND SHOULDERS
Description:
The inverted head of this pattern is the low in the middle. The first and the third lows are the resistance and are called as shoulders, the second lows is called as the head. A neckline can be drawn connection the high points of the two shoulders. This pattern is the opposite of the regular head and shoulders and is used to determine a change in a down trend.
Characteristics:
1. At first the price goes to a low and from there it comes up.
2. Then the price falls to a new low which is lower than the previous low and comes up again.
3. And for the third time the price falls, But will not fall as deep as second low.
Volume:
Traders will watch out for a big increase in volume at the time of the breakout.
Target:
Calculate the distance the from the neckline to the bottom of the head and then added to the neckline when ever it breaks out. And one should also consider long term moving averages and fibonacci retracements also as a guide for fixing targets.
CLICK HERE TO SEE NIFTY'S RECENT INVERTED HEAD AND SHOULDERS
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