Explanation of chart models in detail, lesson one.
The first model.
(Head and shoulders).
The ideal head and shoulders model has the following main conditions:
1/ The top of the head is the highest between the peaks of the shoulders.
2/ The right shoulder is higher than or equal to the left.
3/ The bottom of the right shoulder next to the head is higher than or equal to the left bottom.
If it is inverted, the right conditions are now reversed.
The percentage of the lower target price is 53%.
Model failure rate is 4%.
Shape: It consists of multiple heads and shoulders.
Symmetry: The head divides the shape into two symmetrical parts, the shoulders should be close in price.
Neckline: At the bottom of the shoulders and is usually horizontal and rarely descending.
Dealing with the model: Calculate the difference from the head to the neckline at point B, subtract from point C to obtain the target price D.
- As shown in the picture ⬇️
...............................
2/ [Inverted head and shoulders]
The percentage of the upper target price is 74%.
Model failure rate is 3%.
Price trend: A downward trend leads to the formation of the model.
Shape: A bottom called a head that is lower than two bottoms called shoulders.
Symmetry: The head divides the model into two symmetrical parts, shoulders must be close in price.
Neckline: At the peaks of the shoulders.
Volume: The trading volume is higher at the left shoulder, indicating a decline.
More than 60% of the time.
Dealing with the model: Calculate the height from the head to the neckline (B) added to the breakout point (C) to obtain the target price.
- As shown in the picture ⬇️
..................
3/ Complex inverted head and shoulders.
The percentage of the upper target price is 74%.
Model failure rate is 4%.
Price trend: A downward trend leads to the formation of the model.
Shape: It is a series of inverted shoulders at the bottom.
Symmetry: The head divides the model into two symmetrical parts, the shoulders must be.
Close in price.
Neckline: At the peaks of the shoulders.
Dealing with the model: Calculate the height from the head to the neckline (B) added to the breakout point (C) to obtain the target price (D) -
As shown in the picture ⬇️
Confirmation: When the price closes above the neckline.
Price trend is often downward.
The price returns after the model forms an upward price.
...................
Explanation of chart models in detail, lesson one.