Important Stocks To Watch - Breakout Stocks/ Important Developments
In this lesson, we will learn how the reverse head and shoulders in the daily chart of DISCA help to point to higher prices in DISCA.
The reverse head and shoulders pattern is a bullish reversal pattern. When it appears, it often tell us that the stock does not want to go any lower. It is bottoming and about to start a new move up.
Read more about the reverse head and shoulders pattern.
The chart above is the daily chart of DISCA.
Notice how the stock made a nice reverse head and shoulders pattern. The head is where the stock move below the left shoulder but it then move back up. The right shoulder appears right at where the left shoulder is.
Notice how a bottoming tail appeared at the right shoulder.
A bottoming tail is a bullish reversal candlestick pattern.
A bullish cross also appeared near the right shoulder. The bullish cross is where the daily 20 MA cross back above the 50 MA.
On the day of the breakout, DISCA gap above a daily downtrend line and the 200 day moving average.
You can take the height of the head and shoulders pattern and project it upwards from the breakout point to get a target.
DISCA's move was textbook like. On the day of the breakout it met its initial target.
Hope this short simple technical analysis lesson help you to understand a bit more about the reverse head and shoulders pattern.
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