Developing head and shoulders formation

A potential head and shoulders formation is developing. It may trigger a strong sell signal.

Signals from such formations are considered some of the strongest sell signals in technical analysis. Please note that such a signal may be triggered soon. In some situations it may be advantageous to sell before the sell signal is triggered, to avoid the risk of a bigger loss.

Important warning signs are:

• Negative volume balance
• Break through rising trend
• Increasing volume down from the head
• Decreasing volume heading up towards right shoulder
• Increasing volume heading down from right shoulder

However, if volume development is positive and the stock remains in a rising trend, it indicates optimism among investors and further positive development for the stock.