Question:

A technical analyst observes a head and shoulders pattern in a stock she has been following. She notes the following information: 

Based on this information, her estimate of the price target is closest to: 
A. $59.50. 
B. $48.00. 
C. $44.50. 

Answer = B 
Price target = Neckline − (Head − Neckline).
In this example, Price target = $65.75 − ($83.50 − $65.75) = $65.75 – $17.75 = $48.00. 

CFA Level I 

"Technical Analysis," Barry M. Sine and Robert A. Strong 
Section 3.3.1.3 

 

 

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