Head and shoulders top

Discussion in 'Technical Analysis' started by a529612, Jan 9, 2007.

  1. What do you look for at the neckline and right shoulder to predict its next move after completing a head & shoulders formation?
  2. Using an Elliott Wave interpretation, the "right half" of the entire H&S top is expected to trace out a 3-wave pattern. The right-side of the head is the a-wave. The left-half of the right-head is the b-wave. The right-half of the right-head is the c-wave. As a rough guideline, the a & c waves should have ~same magnitude. The b-wave ideally will make a 50% - to - 62% retracement of the a-wave. You want to be positioned ahead of the breach of the neckline with the c-wave if you're able to identify the H&S formation soon enough.
  3. Sometimes the graph price value decreases below a long term trend line.

    I might look for divergence between the price curve and the RSI or MACD curves.