Reverse Head and Shoulders Components
Left Shoulder: Bears push prices downwards making new lows; however, bulls begin to return and push prices slightly higher.
Head: Price gains don't last long before bears return and push prices even lower than before; a bearish sign. Prices then find buyers at the new lower prices.
Right Shoulder: The bears push downward again, but this time fail to make a lower low. This is generally seen as bullish sign, bears were unable to push prices further down. Decision time occurs when the price is pushed higher back to support (Confirmation line); either bears will push prices back down or bulls will push prices higher, regaining control of the stock, future, or currency pair.
Reverse Head and Shoulders Potential Buy Signal
When price closes above the confirmation line, a potential signal is given. Usually an upward sloping confirmation line is seen as a more powerful Reverse Head & Shoulders pattern, mainly because an upward sloping confirmation line means that prices are making higher highs.
Disclaimer - For educational purposes only
Left Shoulder: Bears push prices downwards making new lows; however, bulls begin to return and push prices slightly higher.
Head: Price gains don't last long before bears return and push prices even lower than before; a bearish sign. Prices then find buyers at the new lower prices.
Right Shoulder: The bears push downward again, but this time fail to make a lower low. This is generally seen as bullish sign, bears were unable to push prices further down. Decision time occurs when the price is pushed higher back to support (Confirmation line); either bears will push prices back down or bulls will push prices higher, regaining control of the stock, future, or currency pair.
Reverse Head and Shoulders Potential Buy Signal
When price closes above the confirmation line, a potential signal is given. Usually an upward sloping confirmation line is seen as a more powerful Reverse Head & Shoulders pattern, mainly because an upward sloping confirmation line means that prices are making higher highs.
Disclaimer - For educational purposes only
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