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A head-and-shoulders pattern on a price chart is typically read as:
AA continuation pattern for the existing uptrend
BA bullish reversal completing a base
CA random formation with no predictive content
DA bearish reversal pattern signalling trend exhaustion
Answer & Solution
Correct answer: D. A bearish reversal pattern signalling trend exhaustion
1. Identify what the question asks: this concept maps to chartpatterns (§2.8).
2. Apply the framework or formula relevant to the topic.
3. Eliminate distractors and arrive at the correct option (D).
_Source: ICAI BoS CA Final Paper 2, Ch 4 "Security Analysis"_
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