NISM Certifications · NISM-Series-XV: Research Analyst · Technical Analysis
A head and shoulders top has a head at Rs 500 and a neckline at Rs 440. The price breaks the neckline downward. Using the standard measuring rule, what is the minimum price target?
The minimum target is Rs 380. The pattern height is the head at Rs 500 minus the neckline at Rs 440, which is Rs 60. Projecting this distance downward from the neckline breakout gives 440 minus 60, equal to Rs 380.
- ARs 380Correct
- BRs 440
- CRs 320
- DRs 400
Explanation
Pattern height = head minus neckline = 500 - 440 = Rs 60. The target is the neckline breakout minus the height: 440 - 60 = Rs 380. Rs 320 wrongly subtracts twice the height, and Rs 440 is only the breakout level.
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