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Chapter 4. The Basics of Technical Analysis > Reverse Head and Shoulders

Reverse Head and Shoulders

Diagram 4.3.2. Reverse Head and Shoulders.


A Reverse Head and Shoulders pattern occurs when a bottom (Reverse Head) is sandwiched between two higher bottoms (Reverse Shoulders). In logical terms, the chart is telling us that the (stock) price has the strength to rise through either preceding lows. This is interpreted as strength, and imminent appreciation in the price is likely by at least the amount of distance (A) between the neckline and the middle (Reverse Head) high.


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