What is Head and shoulders pattern and how to trade with that?*The Head and Shoulders ( Bearish ) pattern is one of the most popular and best known price patterns in trading.
This is a very accurate trading signal if you know how to use it properly and flexibly.
*What is Head and Shoulders? How to identify and characterize
Head and Shoulders is the name of a special type of price pattern that usually appears at the end of uptrends. This is a signal of future downtrends.
It is called Head and Shoulders because the shape of this pattern on the price chart is similar to that of the human body including Left Shoulder, Head, and Right Shoulder.
The line connecting the two troughs of the shoulders is often called the neckline. In fact, this pattern is perfect when the Neckline is horizontal (the prices of the two lows are approximately the same).
How to trade with this:
ENTRY POINT : Right after the candlestick breaks out of the neckline (or at the Retesting the neckline )
STOP-LOSS : At the peak of the right shoulder.
TARGET : Usually, Head and Shoulders is a pattern for starting a downtrend. Therefore, adjust the first target to the height of the neckline to the top (H) of the pattern and adjust the next targets according to the past price and chart.
This is the academic shape of this pattern, in the future we will publish other types of head and shoulder patterns 📚 . Please follow our page to be informed as soon as the materials are published.
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