Head Shoulders bottom follows the falling market and signals a reversal. As the name suggests, the figure is composed of left shoulder, head, right shoulder and neck line. Among the three successive valleys, the middle valley bottom (head) is the deepest, the first and last valley bottom (left and right shoulder respectively) is shallow and nearly symmetrical, thus forming the head shoulder bottom shape. Once the price rises above the resistance line (neck line), it will rise sharply.
Trading volume can serve as an important indicator for the head shoulder bottom shape. In most cases, the left shoulder is larger than the right shoulder and the head. The falling volume and the innovative low head volume can serve as a warning signal that the market is reversing on the horizontal line.
The second warning signal is that when the price rises from the top of the head, that is, after the price breaks through the neck line upward, it falls back to the neck line support level again, and then rises sharply. Finally, the reversal signal is to seize the opportunity to purchase after the price breaks the neck line. If it fails to follow up, it is expected to buy when "back drawing" is expected to return to the test neck line support level.
In most graphs, when the resistance line is broken, the same resistance line changes to the support line in the aftermarket.