![]() ![]() The pattern begins with a pole formation, which represents a nearly vertical and steep price move. It is a trend continuation pattern that gets its name from its visual resemblance to a flag on a flagpole. In an ideal world, the two shoulders would be the same height and width. Volume is typically highest during the first two declines, and then decreases through the right shoulder. Many traders look for a significant increase in volume to confirm the validity of the breakout. A move above the resistance, also known as the neckline, is interpreted as a signal for a sharp upward move. The shoulders are formed by the first and third troughs, while the head is formed by the second peak. Finally, after the completion of an Inverse Head and Shoulders pattern indicates a bullish trend reversal. ![]() The price falls a third time, but only to the level of the first trough, before rising again and reversing the trend.The price falls again, forming a second trough significantly below the initial low, before rising again. ![]()
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