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Head & Shoulders Bottom

Trading Term

This pattern marks a reversal of a downward trend in a financial instrument’s price. An investor will be looking for increasing volumes at the point of breakout. This increased volume definitively marks the end of the pattern and the reversal of a downward trend in the price of a stock. The lows of the shoulders are definitely higher than that of the head and, in a classic formation, are often roughly equal to one another. The neckline usually points down in a Head and Shoulders Bottom, but on rare occasions can slope up. The pattern is complete when the resistance marked by the neckline is “broken”. This occurs when the price of the stock, rising from the low point of the right shoulder moves up through the neckline.

Trading Central chart pattern of Head and Shoulders bottom.

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