It is formed by a peak (shoulder), followed by a higher peak (head), and then another lower peak (shoulder). A "neck" drawn by connecting the lowest points of the two valleys. The slope of this line can be up or down. Usually, when the neck down, resulting in a more Reliable signal.
In this example, we can easily see the head and shoulders pattern.
The head is the second peak and is the highest point in the pattern. Both shoulders also form peaks but do not exceed the height of the head.
With this formation, we place an entry order below the neckline.
We can also calculate a target by measuring the high point of the head to the neck. This distance is approximately how far the price will move after the neck is broken.
You can see that once the price falls below the neckline to reach a target that is at least the size of the distance between the head and the neck.
We know you think to yourself, "prices continue to move down even after reaching the target!."
And our response, "DO NOT greedy! "
Inverse Head and Shoulders
It is basically a head and shoulders, but upside down.
A valley is formed (shoulder), followed by an even lower valley (head), and then another higher valley (shoulder). These formations occur after extended downward movement.
Here you can see that it is like a head and shoulders pattern, but upside down. With this formation, we will place a buy order entry at the top of the neck.
Our target is calculated as the head and shoulders pattern. Measure the distance between the head and neck, and that is approximately the distance that the price will move after breaking the neck.
You can see that the price is moving up through the neck.
If you hit the target, then happy with your profits. However, there are management techniques of trading in which you can lock some of your profits and still leave your order open.
You know what Reversal pattern with Head And Shoulder Reversal Pattern now
wish give you benefid
