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HEAD AND SHOULDERS PATTERN

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Head and Shoulders pattern The head and shoulders pattern can be either head and shoulders, top or head and shoulders bottom. The Charts are a picture of a head and shoulders movement, which portrays three successive rallies and reactions with the second one making the highest/lowest point.  3.2.1 Head and Shoulders (Top reversal) A Head and Shoulders (Top) is a reversal pattern which occurs following an extended uptrend forms and its completion marks a trend reversal. The pattern contains three successive peaks with the middle peak (head) being the highest and the two outside peaks (shoulders) being low and roughly equal. The reaction lows of each peak can be connected to form support, or a neckline As its name implies, the head and shoulders reversal pattern is made up of a left shoulder, head, right shoulder, and neckline. Other parts playing a role in the pattern are volume, the breakout, price target and support turned resistance. Lets look at each part individually, and then put
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WHAT ARE SUPPORT AND RESISTANCE LINES?

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What are support and resistance lines? Support and resistance represent key junctures where the forces of supply and demand meet. These lines appear as thresholds to price patterns. They are the respective lines which stops the prices from decreasing or increasing. A support line refers to that level beyond which a stock’s price will not fall. It denotes that price level at which there is a sufficient amount of demand to stop and possibly, for a time, turn a downtrend higher. Similarly a resistance line refers to that line beyond which a stock’s price will not increase. It indicates that price level at which a sufficient supply of stock is available to stop and possibly, for a time, head off an uptrend in prices. Trend lines are often referred to as support and resistance lines on an angle. 3.1.1 Support A support is a horizontal floor where interest in buying a commodity is strong enough to overcome the pressure to sell. Support level is the price level at which sufficient demand exi
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CANDLE CHARTS

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  CANDLE CHARTS Learning objectives After studying this chapter the student should be able to understand: • Types of charts • The candlestick analysis • Pattern Psychology – investors’ psychology behind formation of candlestick pattern 2.1 The charts What is a chart? Charts are the working tools of technical analysts. They use charts to plot the price movements of a stock over specific time frames. It’s a graphical method of showing where stock prices have been in the past.A chart gives us a complete picture of a stock’s price history over a period of an hour, day, week, month or many years. It has an x-axis (horizontal) and a y-axis (vertical). Typically, the x-axis represents time; the y-axis represents price. By plotting a stock’s price over a period of time, we end up with a pictorial representation of any stock’s trading history.A chart can also depict the history of the volume of trading in a stock. That is, a chart can illustrate the number of shares that change hands over a cer
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