Reversal Patterns Head and Shoulder and Inverted Head

Reversal Patterns Head and Shoulder and Inverted Head and Shoulders

Head and Shoulders A regular “Head and Shoulders” pattern, has three consecutive bumps and after the price goes past the right shoulder, it is a time to sell. After the right shoulder, there will be a sizeable increase in trading volume.

Inverted Head and Shoulders A regular “ Inverted Head and Shoulders” pattern has three consecutive bumps (valleys instead of peaks) and after the price goes past the right shoulder, it is a time to buy. After the right shoulder, there will be a sizeable increase in trading volume.

Example – Regular Head and Shoulders • Strategies if you spot a Regular Head and Shoulders Pattern: o If you have purchased stock, it is a time to sell o If you are not an owner, it is an opportunity to short sell o It is also an opportunity to buy put options

Example – Inverted Head and Shoulders Pattern • Strategies if you spot an Inverted Head and Shoulders Pattern: o It is an indication that you should buy. o It is also an opportunity to buy call options

Practice • Visit: https: //www. tradingview. com/e/ • Look up the Line Charts for: – IBM – Apple – TD – Loblaw's – En. Cana • Find at least one Head and Shoulder Pattern or Inverted Head and Shoulder Pattern.