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Reversal Patterns. Head and Shoulder and Inverted Head and Shoulders. Head and Shoulders.

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Presentation Transcript
Reversal patterns

Reversal Patterns

Head and Shoulder and Inverted Head and Shoulders


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
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
Example – Regular Head and Shoulders

  • Strategies if you spot a Regular Head and Shoulders Pattern:

    • If you have purchased stock, it is a time to sell

    • If you are not an owner, it is an opportunity to short sell

    • It is also an opportunity to buy put options


Example inverted head and shoulders pattern
Example – Inverted Head and Shoulders Pattern

  • Strategies if you spot an Inverted Head and Shoulders Pattern:

    • It is an indication that you should buy.

    • It is also an opportunity to buy call options


Practice
Practice

  • Visit: https://www.tradingview.com/e/

  • Look up the Line Charts for:

    • IBM

    • Apple

    • TD

    • Loblaw's

    • EnCana

  • Find at least one Head and Shoulder Pattern or Inverted Head and Shoulder Pattern.


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