Chart Spotlight Top Advisor's Corner Learning Center Members Help
       
 
       
     
     
  Reverse Head and Shoulders  
     
       
   
 

A Reverse Head and Shoulders formation is a triple bottom with the middle bottom (head) being the lowest. The "neckline" is drawn across the two tops that separate the head from the shoulders. The left shoulder and head are lower lows proving the sellers are in control. The neckline is the point at which the buyers lose control and declines resume. the right shoulder, which is a higher low, demonstrates that sellers are losing strength, and, when the neckline is penetrated to the upside, the buyers are back in control.

Once the breakout above the neckline occurs, the expectation is that price will move up at least an amount equal to the distance from the top of the head to the neckline. In the example you can see that it far exceeded that expectation.

 
   
       
  Back to Learning Center Menu