How to deal with Head and Shoulders pattern
The head and shoulders pattern is one of the most reliable chart models so it is very important to identify it in order to execute a profitable trade with the least possible exposure to risk.
The basic concept of such a model is the formation of a final maximum ( head ) separated by two more contained raises (shoulders ) that can also be not identical for entity of change price. The formation of such figure can be both of change trend and continuation/strengthening of the primary trend.
In the stock market becomes more easily identifiable because of increase or decrease of volumes at key points; maximum volumes in the construction of the left shoulder and head, lower volumes in the construction of the right shoulder.
It is more difficult to frame a head and shoulders in the forex market by analyzing the volumes as they may not be the real volumes of the trades.
The line that supports the structure is called neckline. The strength of a head and shoulders also depends on the timeframe (daily, weekly, monthly) with which you look at the chart, in fact, the higher the timeframe more time will take for the formation but will be more strong the final movement.
Example 1 ----> imgur.com/a/xSPUZZp
Example 2 ----> imgur.com/yj6as00
The formation of the pattern that we see in the figure in the link , as mentioned above , could also be slightly inclined, often depends on the primary trend for which to have an inaccurate neckline. It ' s also possible a head and shoulders inverted pattern as you see in the figure which to the contrary of the first one presages a possible break to the rise of the prices and therefore a change trend from short to long.
Thanks for support , if you like the post push the like button and tell me what you think about it or if it was useful to you. The post explains my operation in the presence of a head and shoulders to take the least risk.
The basic concept of such a model is the formation of a final maximum ( head ) separated by two more contained raises (shoulders ) that can also be not identical for entity of change price. The formation of such figure can be both of change trend and continuation/strengthening of the primary trend.
In the stock market becomes more easily identifiable because of increase or decrease of volumes at key points; maximum volumes in the construction of the left shoulder and head, lower volumes in the construction of the right shoulder.
It is more difficult to frame a head and shoulders in the forex market by analyzing the volumes as they may not be the real volumes of the trades.
The line that supports the structure is called neckline. The strength of a head and shoulders also depends on the timeframe (daily, weekly, monthly) with which you look at the chart, in fact, the higher the timeframe more time will take for the formation but will be more strong the final movement.
Example 1 ----> imgur.com/a/xSPUZZp
Example 2 ----> imgur.com/yj6as00
The formation of the pattern that we see in the figure in the link , as mentioned above , could also be slightly inclined, often depends on the primary trend for which to have an inaccurate neckline. It ' s also possible a head and shoulders inverted pattern as you see in the figure which to the contrary of the first one presages a possible break to the rise of the prices and therefore a change trend from short to long.
Thanks for support , if you like the post push the like button and tell me what you think about it or if it was useful to you. The post explains my operation in the presence of a head and shoulders to take the least risk.
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