Summary of Head and Shoulder Pattern

Summary of Important Points for Head and Shoulder Pattern with Volume:

  • A prior uptrend is present.
  • A left shoulder on heavier volume (point A) is followed by a corrective dip to point B.
  • A rally into new highs occurs but on lighter volume (point C).
  • A decline that moves below the previous peak (at A) and approaches the previous reaction low (point D).
  • A third rally (point E) occurs on noticeably light volume that fails to reach the top of the head (at point C).
  • A close (point F) below the neckline is observed.
  • A return move back to the neckline (point G) is followed by new lows.

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