Sunday, August 10, 2008

Head and shoulder reliable reversal pattern

Head and shoulder pattern

Head and Shoulders (H&S) is the most common and reliable reversal pattern. H&S pattern appears at the end of a bullish trend. Typically, it takes at least two to three months to complete and sometimes much longer. When a stock breaks below the neckline, there is no longer any support and very rapid declines can occur, often on increasing volume.

1. A confirmed head and shoulders formation offers an excellent shorting opportunity.
2. It can also provide an early warning sign for those with long positions to sell quickly.

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