How to draw the neckline
The neckline is a figurative description of the key position of the price fluctuation trend line in technical analysis.
Taking the head and shoulders bottom pattern as an example, take the line connecting the left shoulder high point and the right shoulder high point, extend it to the left and right, and form a line with a gentle trend. The reason why the neckline is important is that it is a dividing line between long and short parties.
When the price rises, if the neckline can be effectively broken, it means that the bulls have the power and the price will rise along the inertia.
On the contrary, when the price falls, if the shorts break through the neckline, it means that the bulls are defeated and the price will enter the falling stage.
The neckline plays a vital role in the game between long and short parties.