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IntermediateStock Alerts + Tools0:45Patterns

The Most Over-Identified Pattern There Is

Head and shoulders is real and it is also seen everywhere it is not. The neckline and the volume are what separate the two.

0:45 · 6 scenes

This lesson is part of a Stock Alerts + Tools plan.

What the lesson covers

  1. 0:00This pattern is real. It is also spotted on charts that do not have it.
  2. 0:05The structure. Three peaks, the middle one highest, with a line drawn under the two troughs.
  3. 0:15The volume signature. Volume should fall from the left shoulder to the head to the right shoulder.
  4. 0:24The rule everyone skips. It is not a pattern until the neckline breaks. Before that it is three bumps.
  5. 0:32Why it gets over-identified. Any three peaks with a higher middle qualify by eye. Most of them fail.
  6. 0:40Three separate tests have to pass, not one shape you recognised.
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Educational content only. MadStockAlerts provides market commentary, research, and educational content. It is not personalized investment advice, and nothing here is a recommendation to buy or sell any security. Trading and investing involve substantial risk, including loss of capital. See the Risk Disclosure and Customer Agreement.
Educational content only. MadStockAlerts provides market commentary, research, and educational content. It is not personalized investment advice, and nothing here is a recommendation to buy or sell any security. Trading and investing involve substantial risk, including loss of capital. See the Risk Disclosure and Customer Agreement.
The Most Over-Identified Pattern There Is — MAD Academy Training Video · MadStockAlerts