long COTI$COTI has formed the Inverse Head and Shoulders pattern. After the breakout of the
resistance, bullish movement to 0,092 is expected to happen.
Hspattern
USDJPY - H&S Pattern at Top of Parallel ChannelHi Traders!
The market is moving in a downtrending Channel.
So, we here have many things which confluence to each other:
Firstly, we have the descending Parallel Channel from the H4 Timeframe.
As you can see, the market made a Trendline when it was moving upwards.
The Break of the Trendline marks the end of the Retracement Move.
The last time the market reached the upper Channel Line,
it also made a Head & Shoulders Pattern.
But why is the Head and Shoulders Pattern such valuable?
What's the logic behind this Pattern?
Here are some questions:
When do we have a typical uptrend?
- When we have higher Highs and higher Lows, great!
What is an indication for the Trendchange?
- A Break of structure
When do we have a break of structure?
- When the rule of higher Highs and higher Lows gets harmed
And this is exactly what happens when we have a H&S Pattern:
The head is the highest High.
The right Shoulder represents the LOWER High.
The kink between the H and the RS represents the Low.
The Breakout of the Neckline (which is at the kink/Low)
represents the lower Low.
The Retest to of the Neckline represents the second lower High.
And if we combine all that together, we have a
market, which turned to a Downtrend after the Uptrend,
having a lower High and a lower Low.
Now the market is retesting the Break of Neckline.
Thanks and successful Trading :-)!
Learning to trade the Head And Shoulders Pattern with Bitcoin.The Head & Shoulders Pattern & Inverse Head & Shoulders Patterns are quite common on Bitcoin and have had great results on the higher timeframe charts.
Here are the main characteristics:
• VOLUME MIMICS PATTERN
• 3 PEAKS, LEFT & RIGHT SIMILAR HEIGHT
• TRIANGULAR IN APPEARANCE
• FOUND AFTER UPTREND
• HIGH SUCCESS RATE
• CAN BE SLANTED
Price forms 3 distinct peaks after a strong uptrend, the left and right peak should have a similar height (shoulders), the middle peak (head) has to be the highest or this can not be a HS pattern. They should seem triangular in appearance but as long as it fits the main characteristics can still be a valid pattern.
The right shoulder should form a lower high which is a early sign of trend change, this is entry A, with entry B being the bearish retest of of the “neckline” (marked on chart #2). The idea is to gain an early entry on the pattern at point A to maximise profits and reduce risk. Once price moves above the middle "peak" it is likely that the pattern is not valid anymore so this allows us to get a tight stop loss upon entry. We measure the height of the pattern and add it to the breakout level for a maximum possible price target.
Volume should also paint the same pattern with the 3 peaks, strong volume on breakout increases success rate.
In this example on Bitcoin earlier this year it played out perfectly, hitting target, when having another great short opportunity on the Bearish Retest. A bearish retest is just a Support & Resistance flip off the pattern breakout level.
After the pattern played out we also saw one more great opportunity with General Pattern failure.
What is General Pattern Failure?
General Pattern Failure occurs when a chart pattern breaks out, fails to hit target, quickly reverses then rejects off that same breakout level back inside the pattern continuing in the opposite direction of the breakout.
Pictured above in the original post is a normal breakout on a Head And Shoulders Pattern while the lower example shows General Pattern Failure on the same pattern. Note how the first example has a Bearish Retest (B) while the second example is coming back inside that area and finding support for a potential long setup.
(The below chart is the above example continued)
General pattern failure can also be considered a Liquidity Grab or can be referred to as a “Fake Out” also when it happens more rapidly after the original pattern breakout.
Learning to trade patterns such as these can provide great opportunities if you understand price action and how to identify the key areas of the pattern that other traders and investors may be focusing on too, these areas become important psychological levels on the chart.
USDCAD forming Head & Shoulders pattern on 4HHS pattern taking shape on the pair. I am in a short position to TP 1.292 so hopefully the USD takes a breather so the pair drops to the TP, or a rise in Oil prices gives some support to the Loonie.
Head and Sholders pattern to Eurusd 1h.Head and Sholders patter formed at 1h. It´s a clear pattern. And Chaikan Money Flow is below of zero it´s another signal to short EurUsd. Parameters are at Chart.
