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.

Developing head and shoulders formation

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.

 


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Investtech guarantees neither the entirety nor accuracy of the analyses. Any consequent exposure related to the advice / signals which emerge in the analyses is completely and entirely at the investors own expense and risk. Investtech is not responsible for any loss, either directly or indirectly, which arises as a result of the use of Investtechs analyses. Details of any arising conflicts of interest will always appear in the investment recommendations. Further information about Investtechs analyses can be found here disclaimer. The content provided by Investtech.com is NOT SEC or FSA regulated and is therefore not intended for US or UK consumers.

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