Head and Shoulders - "Learn More Earn More" with us

20 nov 2020

Inverted Head and Shoulders Definition:

A head and shoulders pattern is also a trend reversal formation.
It is formed by a Valley (left shoulder), followed by a Lower Valley (head), and then another Higher Valley (right shoulder).
A “Neckline” is drawn by connecting the highest points of the two Peaks. Neckline resistance does not need to be strictly horizontal.

. This illustrates that the downward trend is coming to an end.
. When a Head and Shoulders formation is seen in an downtrend, it signifies a major reversal.
. The pattern is confirmed once the price breaches the neckline resistance.

In this example, we can easily see the head and shoulders pattern.

How to Trade the Head and Shoulders Pattern:

ENTRY:
we put an entry order below the neckline.

TARGET:
We can also calculate a target by measuring the high point of the head to the neckline.
This distance is approximately how far the price will move after it breaks the neckline.

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