[Summary]
Head and shoulders is a ceiling formation pattern with the highest high in the center and slightly lower highs on the left and right sides.
In Japan, it is also called the Sanson Ceiling, and it attracts attention at the end of an uptrend. When weakness in the right shoulder becomes visible, it is a sign that the momentum of buyers has decreased.
What is Head and Shoulders?
Head and Shoulders is a chart pattern that consists of three peaks.
The name comes from the fact that the mountain in the center looks like the head and the mountains on either side look like the shoulders.
Lower neckline
In this pattern, the line connecting the left and right valleys is called the neckline.
When you fall below the neckline, you will be more aware of the formation of the ceiling. It is not enough just to have similar shapes; the focus is on whether the support line can be broken in the end.
Points to see
- Is the middle high the highest?
- Is the right shoulder rising weakly?
- Did it fall below the neckline?
- Is trading volume changing from decreasing to increasing?
Summary
Head and shoulders is a typical ceiling pattern that represents the process of weakening an uptrend.
In addition to the shape, check the neckline to make a judgment. Even if it looks like the Sanzon, if it recovers without breaking, your perspective will change.