|Head And Shoulders Bottom
A Head and Shoulder bottom is a three-trough formation with the center trough lower than the others. It resembles a head and shoulder bust flipped upside down. The left and the right shoulders should be opposite one another about the head, somewhat equidistant in both time and price. There are wide variations but the formation is noticeably symmetrical about the head.
Percent of successful formations – 62%
Failure rate – 5%
Average time to throwback completion – 2 hours
Compute the formation height by subtracting the value of the lowest low reached in the head from the nearest highest high, located between the head and the shoulder. Add the difference to this point. The result is the target price to which price will rise, at a minimum.