Head and shoulders" is also a term used in technical analysis of stock charts to describe a specific price pattern that can indicate a potential reversal in the direction of the market trend. A head and shoulders pattern forms when the price of a stock or other asset reaches a high point (the "head"), then falls back to a lower point (the "left shoulder"), and then rises again to a similar high point (the "right shoulder"), before falling again. This pattern is considered a bearish indicator, as it suggests that the asset's price is likely to continue to fall.
Traders and investors use different tools such as trend line, support and resistance, moving averages etc. to confirm the pattern formation and make their decisions accordingly.
0 Comments