Head and Shoulders Tutorial on Crude Oil ChartI have decided to start a short series of tutorials covering common instruments used in technical analysis.
In today's tutorial, we observe a successfully identified head and shoulders pattern on the 4-hour chart of Crude Oil, resulting in a substantial movement of around 17%.
Here's how to find the instrument: navigate to the left sidebar and select 'Patterns,' where you will find 'Head and Shoulders.'
Analyzing and trading correctly involve the following steps:
1) Both shoulders must form within a rising or falling trend. In the case of that Oil chart, we observe a rising trend, indicating a potential short position.
2) The size of the head becomes our target for take profit (TP), and upon reaching TP, we close 80% of the position.
3) Ideally, volumes at the right shoulder should decrease, and upon breaking, they should increase.
Risk Management Strategy:
1) Limit each trade to no more than 2% of your deposit.
2) Always utilize stop-loss and take-profit orders.
3) Never trade money you are not prepared to lose.
4) Start with small budgets.
It is crucial to emphasize that risk management must be adhered to whenever you engage in trading!
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