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Technical analysis II

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11. Head and shoulders bottom

A Head and Shoulders Bottom is the inverse of a Head and Shoulders Top, and it signifies a reversal from a downtrend to an uptrend.

A head and shoulders bottom



The main difference between this and the Head and Shoulders Top is in the volume pattern associated with the share price movements.

The volume should pick up as the prices increase from the bottom of the head and then increase even more on the rally which follows the right shoulder. If the neckline is broken but volume is low, you should be sceptical about the validity of the formation.

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