AdvancedMAD Academy1:24Set-ups

The shoulder that does not reach the head

The most recognized reversal shape, and the one claim inside it that actually does the work. Plus why its published success rates are the least trustworthy in the field.

1:24 · 9 scenes

This lesson is part of a MAD Academy plan.

What the Lesson Covers

  1. 0:00Three lows, the middle one deepest. Everyone recognizes the shape, which is part of the problem with it.
  2. 0:06The shape. A low, a rally, a deeper low, another rally, then a third low well above the middle one. A line across the two rallies is the neckline.
  3. 0:17Why it forms. The head is capitulation. The right shoulder is the same selling being attempted again and failing to get anywhere near as far.
  4. 0:27The levels that matter. The neckline, the head, the right shoulder's low, and the vertical distance from head to neckline. The neckline slopes, so it has to be re-read.
  5. 0:37Where it completes. A close above the neckline completes it. Below the right shoulder's low the pattern's one real claim has been falsified.
  6. 0:48How often it follows through. Sixty-two to sixty-eight. The published numbers for this shape are the most inflated in the field, because the failures are never recorded as patterns.
  7. 0:57The same shape failing. Here the right shoulder simply keeps going, takes out the head, and every part of the structure disappears at once.
  8. 1:08The tells. A heavy right shoulder, a neckline sloping steeply down, or a right shoulder deeper than the left.
  9. 1:18One claim carries this pattern: the third low does not reach the second.
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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 shoulder that does not reach the head — MAD Academy Training Video · MadStockAlerts