Lester Daniels's Avatar
Lester Daniels
published in Blogs
Nov 30, 2021
Identifying Head-and-Shoulders Patterns In  Stock Charts

Identifying Head-and-Shoulders Patterns In Stock Charts

The bullish head and shoulders are the opposite image of a bearish head and shoulders. It has all the same parts—two shoulders, a neckline, and the head. Only instead of the shoulders and head being formed at high points for the stock, they are formed at low points.

 


 

Investor psychology is the opposite of the bearish pattern. The stock is falling and hits a temporary low to form the left shoulder before a bounce occurs and forms the left side of the neck. The upward momentum is temporary and the next down leg takes the stock lower than the left shoulder and forms the head.

Investors jump in thinking the new low is a buying opportunity but then start taking profits after a decent run-up to the neckline. The profit-taking creates the next down leg, but investors start buying on this third down leg before it gets down to the previous low. This forms the right shoulder and starts the next upward move.

Now, the momentum is to the upside and the buying pressure sends the stock above the neckline. At this point, the pattern is confirmed. After breaking above the neckline, the upward momentum is likely to continue and the stock price keeps moving higher.

With the drawings, the patterns are drawn perfectly symmetrical so they are easier to explain and recognize. However, on real charts, the pattern is very rarely symmetrical. Sometimes the neckline will have a little slope to it and one shoulder maybe a little lower or higher than the other.

Here is an example of a bullish head and shoulders pattern that was spotted by the Tickeron Pattern Search Engine on Apple.

 

 

The first shoulder is formed in mid-August with the first trip to the neckline coming at the end of August. The head forms on September 25 and then the stock moves up to form the right side of the neck. Another slight dip around October 20 forms the right shoulder and then the stock moves sharply higher and moves all the way up above $173 from the $160 area.

Because the patterns aren’t symmetrical, sometimes they can be difficult to spot. That’s why an artificial intelligence program like Tickeron’s Pattern Search Engine is so valuable. It can find the patterns easier than the human eye and give subscribers more opportunities.

For example, if Tickeron’s AI is asked to detect all head-and-shoulders bullish patterns with a 60%+ confidence level and a greater than 5% distance to the target price (potential profit), then the user would discover that Tickeron’s AI has discovered 3,029 confirmed patterns meeting that criteria, having searched about 4000 stocks, around 10,000 ETFs, hundreds of FOREX and cryptocurrencies. 

 

 

With that success rate and with the average return on successful readings being so much better, investors could have a tremendous advantage. The Tickeron Pattern Search Engine can help investors find trading opportunities with the touch of a button.

If you’ve never seen technology like this before, it’s because it has never been available to retail investors in this format. The idea is to provide retail investors with technology and tools to enable trading with massive amounts of data and analysis. The end result is arming retail investors with a high-powered, virtual research assistant: Tickeron’s Artificial Intelligence.

Click the link to see statistics for other confidence levels and distance to the target (potential profit) for this patternhttps://tickeron.com/app/patterns/patterns/pattern/13

We invite you to check out our other premium products — they’ll help you be best prepared to take on the market. Some of the premium products that might be helpful for a new trader are the A.I. Pattern Search Engine and the A.I. Trend Prediction Engine. For a continuing trader, A.I. Real Time Patterns and our Screener are great ways to pinpoint what you’re looking for and monitor the securities for an extended period. 

Related Tickers: AAPL
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Mar 07, 2021
4 Tricks Hedge Funds Use to Get Ahead

4 Tricks Hedge Funds Use to Get Ahead

If the stock market were Major League Baseball, hedge funds and institutional investors would be the pros on championship teams while everyday self-directed investors (SDIs) are the benchwarmers in the minors.It’s how they get ahead, and it’s why 90% of SDIs lose money trying to play (invest and trade) in the major leagues. The 4 tricks we discuss below are rooted in one common theme: they all use Artificial Intelligence and algorithms to generate data and ideas.
John Jacques's Avatar
John Jacques
published in Blogs
Mar 22, 2018
A.I. Stock Market Predictions: Head & Shoulders

A.I. Stock Market Predictions: Head & Shoulders

Statistics for the Head-and-Shoulders Bottom Pattern The days where only hedge funds used algorithms to trade stocks are officially over. Now retail investors can use Artificial Intelligence (A.I.  Here’s an example of the algorithm in action: Late last year, Tickeron’s A.I.
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Jul 10, 2020
3 Stocks to Buy if Coronavirus Second Wave Hits

3 Stocks to Buy if Coronavirus Second Wave Hits

By analyzing market trends from the first wave, you can predict behavior for the second. Technology stocks have performed at historic levels this year, but the market is severely overbought.To compensate for that, look at performance during Q1 and Q2, the height of global Covid shutdowns.
Edward Flores's Avatar
Edward Flores
published in Blogs
Feb 06, 2021
How to Become the Millionaire Next Door

How to Become the Millionaire Next Door

The Golden Gate Bridge is always a fixture of these walks too, one of man's most beautiful creations.  As we were walking, at one point she turned to me and said, "Man, I'll never have a million dollars."" My girlfriend is 27 years old and works as a graphic designer, making about $75,000 a year.
Alla Petriaieva's Avatar
Alla Petriaieva
published in Blogs
Feb 23, 2021
Is Ethereum’s Bomb about to Explode?

Is Ethereum’s Bomb about to Explode?

Ethereum’s software is set for an update in October.Until it is finished, participants in the Ethereum blockchain must determine how to delay the difficulty bomb – code that necessitates a steadily increasing amount of computer power to mine blocks and unlock rewards – that is already in place.
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Aug 07, 2018
When Is the Next Recession Coming?

When Is the Next Recession Coming?

However, we also know that economists predicted 22 recessions out of 11 that took place since 1945. Are there real recession signs we should watch for?Indeed, the answer is yes, and here are a few very important ones: The first one is almost obvious and known to everyone – it is the Fed.
Abhoy Sarkar's Avatar
Abhoy Sarkar
published in Blogs
May 22, 2020
Central banks have been buying $2.4 billion in assets every hour for the past two months

Central banks have been buying $2.4 billion in assets every hour for the past two months

Some $17.8 billion has been poured into  bond markets over the past week, the biggest move in more than three months.Around $3.5 billion has been invested into gold, the second largest on record. 
Rick Pendergraft's Avatar
Rick Pendergraft
published in Blogs
Feb 07, 2021
Mid-January Short Interest Report Shows 8 Stocks with Good Fundamentals and High Short Interest
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Mar 10, 2021
How to Start Trading Penny Stocks

How to Start Trading Penny Stocks

Penny stocks have long been marginalized within the professional investment community, oftentimes being painted with a broad brush of simply being “too risky.” Leonardo DiCaprio’s depiction of the penny stock peddling conman, Jordan Belfort, in the Wolf of Wall Street certainly didn’t help.Here are four reasons to start trading them now. Reason #1: Let’s State the Obvious -- Penny Stocks are Cheap A single share of Apple Inc. costs over $350.
Abhoy Sarkar's Avatar
Abhoy Sarkar
published in Blogs
May 08, 2020
US unemployment rate jumps to 14.7%, the highest in series history

US unemployment rate jumps to 14.7%, the highest in series history

The U.S. economy’s employment fell by -20.5 million in April. The coronavirus crisis led to unemployment rate soaring to 14.7% in the U.S, the highest rate in the Bureau of Labor Statistics-tracked series history that goes back to 1948. However, the figures were better compared to several economists'/analysts' forecasts of 22 million job losses and 16% unemployment rate.  Another unemployment measure that includes those who have stopped looking for work as well as those holding part-time jobs for economic reasons also touched an all-time high of 22.8%.