As part of articles series about Technical Analysis , I'll explain Head And Shoulders Pattern
: I talked in previous articles about
Head And Shoulders Pattern
Head And Shoulders Pattern is most reliable pattern which shown on the chart ,this pattern consists at the end of up trend and reverse it to down trend and it's a strong signal to take selling decision
Head And Shoulders Pattern
Form Components
Left shoulder - Head - Right Shoulder - Support Line
The Left Shoulder
The Market Looks forward to test the highest levels and here the left shoulder consists , notice that the price after consisting of left shoulder remains above of support line and unable to broke the support
The Head
After that the price test the highest levels again and in this time it succeed to reach to higher levels and achieved high level higher than the left shoulder level ,and this new level (head) , and notice that the price remains traded above support line and unable to broke it downward
The Right Shoulder
After that the price try to rise for a third time but it fails in achieving high levels higher than the head level , here the third level of right shoulder consisting
After that in this time we notice that the price will able to to broke the support line and the price will fall downward and will look forward to search about new low levels
The Support Line or Nick Line
The Support Line is a line has drawn depend on connecting the lowest levels , and it's a line where the prices be fixed above of it
When this pattern shows to us that mean we must be ready to take sell decision when the prices break support line
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