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How To Trade Classical Head And Shoulder Formations.________________________________________________________________________________________________________________________________________ Hello Traders Investors And Community. Welcome to this idea about the classical head and shoulder top formation which can be found on smaller timeframes as also higher timeframes. Although there are inverted head and shoulder formations and formations which brake to the upside than to the downside there are often failures in these formations whereas this is the classical formation confirming the reversal with volume and the activated price-target with a high probability. The formation can be divided into 5 phases with each phase confirming the ongoing formation and besides that minor phases and major phases which increasing the possibility for the head and shoulder formation to form the final breakout and confirmation. The formation can be traded in several ways where the most common ways are either with the final confirmation or before the final confirmation, both with different risk-preferences and fitting to each trader individual approach. ________________________________________________________________________________________________________________________________________ Confirmational Phases 1.) Buying Climax On High Volume 2.) Consolidation And Declining Volume Upside Attempt 3.) Upward Breakout With Lower Volume To Prior Climax High 4.) Another Consolidation Like (3.) With High Declining Volume 5.) Neckline Forming By Lowest Point With Following Breakout ________________________________________________________________________________________________________________________________________ First Phase: Up to this point a strong upward breakout is reaching up to new highs with increased volume, this looks just like a continuation of the priors established uptrend till bearish pressure sets in and the first signs of weakness showing a possible stopping of the uptrend with firstly declining volume. Second Phase: In this phase, the price forms a consolidation zone which can look like a bull-flag or triangle in decreasing volume before it shows an upside breakout on low volume, this is also forming the overall left shoulder and the established channel can be used for the ongoing measured right shoulder. Third Phase: This is an important phase and the key point of the formation where another upside attempt follows with significantly decreased volume forming the head before showing a markdown with still lower volume marking weakness of the bulls and a continuation of the head and shoulder formation. Fourth Phase: This is the last attempt to form new highs in the structure with lower volume compared to the phases before and normally low momentum showing the increased weakness of the bulls before the initial markdown shows up and set up for the final breakout confirmation in the fifth phase. Fifth Phase: The final confirmation the fifth phase showing the break of the prior established neckline and therefore the last confirmation point where a breakout happens with high bearish volume confirming the following moves to the downside and activating the overall head and shoulder downside target. ________________________________________________________________________________________________________________________________________ Trading Approaches A.) Trade The Final Confirmation B.) Trade The Right Shoulder Forming Trade The Final Confirmation: In this approach, a trade on the short-side is placed when the dip down of the right shoulder penetrates the neckline which is confirming the overall formation, the stop-loss is placed above the right shoulder, a variation of this is to sell short when the right shoulder has finally broken the neckline to the downside but as this move can be volatile and fast it has to be done before the selling pressure sets in, the minimum target is the price projection from the high at the head of the formation to the neckline measured from the breakout to the downside. Trade The Right Shoulder Forming: This is the more speculative variation but can result in a good risk-reward and profit potential, in this scenario the trade is placed when the head with low volume has formed, price touched the neckline and the head of the right shoulder is forming on decreased volume, the stop-loss will be placed above the head of the formation or above the right shoulder. Placing the stop above the head of the formation in this variation will be the more logical and conservative approach, the targets in this variation are the same like in the first one with price projection of final confirmation. ________________________________________________________________________________________________________________________________________ When spotted right and traded in the mentioned manner the trade of this formation can lead to a good profit. Also, the volume is playing a major role in this formation, although it can vary in some cases it will add to a high probable trading setup on the short-side. There are other variations of the head and shoulder formation but they arent that accurate in the approach like the classical head and shoulder top formation pointed out here. ________________________________________________________________________________________________________________________________________ In this manner, thank you for watching, support for more tutorials and a good day! trading effectively is about assessing possibilities not certainties Information provided is only educational and should not be used to take action in the markets. ________________________________________________________________________________________________________________________________________
BITSTAMP:BTCUSDEducation
by VincePrince
32
USD/CHF Price Action Pattern OPPORTUNITY!!Hello Everyone, Here we have very well pennant pattern sample on #USDCHF. If price breaks to the upside of pattern, we can look forward for long position, If breaks reversely then short position is also possible with nice rewards. On Daily Chart , trend is up, so mostly we will see the pennant broken out through upside, according to the normal behavior. After breaking of the pennant, please look at for more verification and after taking profit-1, it is strongly supposed to bring your stop loss to the break even point. Please note that the ideas are not a recommendation for trading !Good Luck!
by Happy-Lion
1
GBPUSD Head and ShouldersWhat is a "Head and Shoulders"? The head and shoulders model is a figure in the technical analysis that looks like a baseline with three peaks, the outer two are close in height and the middle is the highest. In the technical analysis, the model describes a specific formation that predicts the reversal of the trend from bullish to bearish. The head and shoulders model is considered to be one of the most reliable models for reversing the trend. This is one of the few models that signals that the upward trend is nearing its end. Requirements for validity: 1.The market must be in an uptrend; 2.The formation has 3 peaks, the outside two are approximately equal, and the middle is higher than them. There are two bottoms between the peaks, which should be equal. Or the second bottom must be higher than the first; 3. The uptrend before the formation should be at least the size of the head in order to have anything to reverse. The trade: It is always better to wait for the test of the neckline, especially for beginners! In general , the stop is placed over the right shoulder. Take Profit = Head height - 10% for cover! Avoid Common mistakes: 1.There is no H&S within a downtrend! Remember that! 2. Better skip the trade when the second bottom is lower than first one! 3. Wait for break and test of the neckline. Thanks for your attention! If you find this post helpful, you can help us too! 📝Comment 📨Share ❤ Like Thank you!
by ForexTrendline
How to Trade Bull & Bear Pennant Pattern | Pennant Tutorial !Pennant Chart Patterns Tutorial ! Pennant Pattern : Pennant Patterns are continuation chart pattern, forms when price of a security or asset makes strong upward or downward movemnt followed by a consolidation period with converging trendlines which forms a pennant before continuing to move in the same direction. Bullish pennant forms in a bullish trend market and Bearish pennant forms in a bearish trend market. Bullish Pennant : Bullish Pennants are bullish continuation pattern that occurs in strong uptrends and it forms after a sharp climb in price then a consolidation period with converging trendlines. After formation of the pennant, price breaks above the upper trendline of the pennant and continues the bullish trend. Bearish Pennant : Bearish Pennant is the opposite of a bullsish pennant. Bearish pennant forms after a sharp drop in price then a consolidation period with converging trendlines after that price makes a brekout below the lower trendline of the pennant and continues the bearish trend. (* Key things to know : In a pennant pattern the period of consolidation should have low volume and the breakout should occur on higher volume like most pattern. Above average volume confirms the breakout. You can also use other indicators like MACD or RSI to know the strength of the breakout. Look at below detailed examples - ) Please Like & Comment and Stay Tuned ! 👍 Thank You-
BITSTAMP:BTCUSDEducation
by tapasdhanadana
5
XJO Bearish Wedge PatternI haven't seen anyone else post it so thought I'd give it a go, the rising wedge pattern is a common formation in bear markets, the closer price moves within the formation to the apex point, the more likely a breakdown will occur and we are close this point as seen in the chart... We have been respecting this pattern really since the start of the rally which really seems to be looking like it has run out of steam (only slightly higher highs since the 31/03) we have only added on an extra 3% since 31/03. Even after today's surge, which was looking very strong until it reached the top of the wedge range and acted as resistance. SPX 500 also has the same pattern and I'm convinced that a big move down is coming perhaps near the end of the formation, which looks to be lining up with a challenge of the 50MA on the daily TF, which may eventuate next week or the week after. Wait for confirmation of course before entering a position.
ASX:XJOShort
by Ravi2409
8
REPBTC Broadening Wedge| Structural Resistance| 200 MAEvening Traders! Today’s technical analysis will focus on REPBTC, in a valid broadening wedge formation with a failed partial raise at structural resistance. Points to consider, - Trend bearish – consecutive lower highs - Structural resistance being tested - 200 MA – local support - RSI trading in a channel - Stochastics in upper regions - Irregular volume present Augur is in a clear defined down trend on the macro scale and is travelling in a broadening wedge that will be confirmed with a break of its ascending support line. The current local support is being established by the 200 MA, a break of this will be in confluence with a break of the broadening wedge. Staunched structural resistance has been respected multiple times; it is in confluence with the .382 Fibonacci. A close above and consolidation will likely test the upper resistance line of the broadening wedge. The RSI is in a clear channel, currently neutral, breaking this channel will dictate the direction of the price. Stochastics are currently in the upper regions, can stay trading here for an extended period of time, however lots of stored momentum to the downside. Augur has irregular volume being present, common in broadening wedge patterns , an influx will be prevalent with a decisive break. Overall, in my opinion, Augur needs to consolidate above structural resistance and create multiple higher lows to negate this pattern. A break of lower support line will however increase the likelihood of testing lower lows. What are your thoughts? Please leave a like and comment, And remember, “If you can learn to create a state of mind that is not affected by the market’s behaviour, the struggle will cease to exist.” – Mark Douglas
RShort
by AzizKhanZamani
ETC/USD - ETC LIKELY TO BREAK OUTHello everybody! Today I stumbled over the ETC/USD chart and saw this lovely Ascending Broadening Channel with an Ascending Channel Inside. It looks like an easy profit if the market continues upwards for a few days more as minimum. Bitcoin SV/USD just broke its formation strongly yesterday and it looks like DASH/USD could break its formation today. The Formations/Lines: - The big Primary formation is an Ascending Broadening Channel ( Purple lines ) - The Secondary formation is an Ascending Channel ( Orange Lines ) - The green line is Horizontal Resistance Line. If ETC close above it, it is bullish and a sign of a try to break the formation to the upside. - Where the Purple and Orange lines meet is likely where we will find out what way ETC is going. So within 1-3 days. - Below the formation, we got 2 lines showing the last Strong Resistance/Support zone for ETC/USD Indicators/technicals/market: RSI: Pointing upwards, seems to have found support, if ETC breaks the green line and stays over it we will see the RSI crossing over to the upside. ( bullish ) -Stoch: Pointing downwards inside the "control zone" . If ETC again stay over the green support/resistance line the Stoch will turn up and there is room to grow. ( bullish ) But as it is now it is bearish while under the green line. - Historical Volatility: Falling, but room to move up, just around the last horizontal point of support. It may likely find support and start expanding. (rating 48ish ) - The general market trend is UP ( bullish ) and can continue like this if the market wants it. Analysis: - If ETC stays below the green line for a few days longer it is more likely we see sideways movement for longer time or a Pretty big drop in price. But right now the market is still bullish and ETC has had some days to consolidate so continued sideways movement much longer is not likely. We should everything taken into consideration included the RSI and Stoch indicators see a strong move to the UP side or DOWN side =) The side of the movement depends if the market keeps going up or down I would say. We could get a big pullback on bitcoin and all altcoins really soon based on the BTC indicators and Historical Volatility . But we could also go higher before it happens. But it is loser now than since the 7k bitcoin bottom is also a way to say it. This is for educational analysis only, This is not financial advice, Nobody can predict the future only optimize our odds. Have a lovely Bullish Sunday everybody =) I hope someone finds benefit in my analysis! Confucius ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- My DASH Breakout Idea - ACTIVE
BITTREX:ETCUSD
by Confucius-The-Great
2
JAKS, Moving Averages in Bullish Formation, Waiting for BreakoutThank you for your continued support :) Strategy: Moving Averages Formation Bias: Bullish As seen in the chart, the Year-Line, Half-Year-Line, and Month-Line are moving in bullish formation, while the price is currently in triangle consolidation above key fibonacci level of the long term trend. Entry: 1.21 Stop-loss: 1.15 1st Target: 1.43 2nd Target: 1.84 Gentle reminder: Plan your trade and trade your plan. Peace out!
MYX:JAKSLong
by ShareWorldConsulting
BASICS TECHNICAL ANALYSIS - TRENDFOLLOW FORMATIONFORMATION ANALYSIS: PRICE PATTERNS AND CHART FORMATIONS A trend setting of technical analysis is formation analysis. In doing so, certain combinations of movement and correction are considered. If such a combination is detected, the trader can try to trade the resolution of the formation. Basically, a different is made between the trend continuation formations and the trend reversal formations. They are often caused by resistance and support lines. Trend continuation pattern: Confirm the strength of a trend. These are, for example, rising / falling triangles. Even flags and pennants (see picture) are seen as a trend continuation.
COINBASE:BTCUSDEducation
by i-like-profit