Contract K-Line Popular Science

I. Bottom Picking Pattern - Head and Shoulders Bottom

The Head and Shoulders Bottom is a typical trend reversal pattern that appears as a bullish formation at the end of a downward trend. The shape consists of the left shoulder, bottom, right shoulder, and neckline; the Head and Shoulders Bottom is one of the most common K-line patterns for determining significant market bottoms.

The characteristics of the Head and Shoulders Bottom are as follows:

1. The market experiences a sharp decline, followed by a rebound that creates the first trough, known as the left shoulder.

2. The first rebound is blocked, the market declines again, breaking below the previous low, then rebounds again, forming the second trough, which is the head.

3. The third rebound is again blocked at the high point of the first rebound. The market begins to decline for the third time but does not go lower after reaching a position close to the first trough and rebounds again, forming the third trough, commonly referred to as the right shoulder.

4. The line connecting the high points of the first and second rebounds is the neckline that hinders the price increase.

When investors encounter the Head and Shoulders Bottom pattern, how can they find the best buying point?

1. When the price starts to break through the neckline, it is a clear bullish signal, and it is advisable to consider buying. The market is likely to rise afterward, and this position is usually referred to as the first buying point.

2. If the price breaks through the neckline and then pulls back, stopping and rising again near the neckline, additional purchases can be made. This position is usually referred to as the second buying point.

3. If the price pulls back after testing the neckline and then rises again to break the previous high, buying can be considered at this point, which is typically referred to as the third buying point.

Warm Reminder:

1. When the embryonic form of the Head and Shoulders Bottom appears, it is essential to make rhythm judgments about the subsequent market movements based on the above situations to confirm whether it is a Head and Shoulders Bottom reversal pattern.

2. It is crucial to pay attention to finer differences in strength and angles, striving to achieve early predictions. When the market operates in line with expected rhythms, it is essential to participate decisively.

Please follow up for more!