The Head and Shoulders Top is another chart that may indicate a stock has make-believe a top. Habitually a Head and Shoulders pattern will have a Head and two Shoulders with a Collar connecting the underside of the two Shoulders. The stock price should find support at the Neckline however if it liberty below that stay then the stock price could spiral downward. I certainly don’t brainwash to be an expert in Head and Ride formations but here are a few examples. Here is a chart of EBAY that shows a top ( Head ) being made in last April. Normally a Head and Shoulders pattern has two Shoulders however licensed appears to be three Shoulders in this case ( points A, B and C ). Determining precisely where to draw the Neckline can be oracular but for this case I will define it from points D to E. In speculation the stock should find maintain at its Neckline if the price drops after forming the second Shoulder ( point B ). In this matter the price dropped back to the Neckline and then rebounded to form a third Shoulder ( point C ). EBAY then dropped again and fell below the décolletage and continued in a downtrend until early Fiery. The next model shows a chart of LVCI. The Head develops in median - July as the stock makes a top. The two Shoulders are defined at points A and B while the Neckline is defined by the racket from points C to D. Once again as the stock broke through its support area at the Neckline it high to drop for several more weeks.
