CFA Practice Question

There are 221 practice questions for this study session.

CFA Practice Question

The head and shoulders pattern signals that ______
A. the security is set to make an upward move.
B. the security is set to make a downward move.
C. the security is set to make an upward and then a downward move.
Explanation: Often coming at the end of an uptrend, the head and shoulders pattern is considered to be a reversal pattern, as the security typically heads lower after the completion of the pattern.

User Contributed Comments 4

User Comment
Shaan23 But it does initially go up to the head and then falls straight down....
Shaan23 I would've chose C
Nakata Where does it say in the question that there was an uptrend before the pattern?
GBolt93 it's not a head and shoulder's pattern if there wasn't. If it was a downtrend you'd have a reverse head and shoulder's pattern. Shaan if it hasn't made the the upmove yet you wouldn't be able to identify the pattern.
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