101.000 The graphic figurine “head and shoulders” is a form of reversal that is most common in upward trends. This model is an accurate reversal pattern that is used to enter bearish positions after a bullish trend. It has three peaks with a higher height in the middle, called the head. And now more details.
Before you can replace it, you should first know the key attributes of the pattern. In this way, you can easily identify the most suitable for trading heads and shoulders. Model
is also creating a trend reversal.
It is formed by the peak (shoulder), then the higher peak (head), followed by another lower peak (shoulder). The line connecting the two troughs is a cutout on the neck. The height of the last peak can be greater than the first, but not more than the head. In other words, the price tried to reach a higher maximum, but failed. The closer two external peaks to the same price, the more accurate the number.
Head and shoulder shape has five attributes. In order of appearance are:
Growth Trend Left Shoulder Boss Right Shoulder Decolletage
What causes the formation of the model head and shoulders?
Each price action carries a message. Some are easier to read than others, but are always present. As for the pattern of “head and shoulders”, we can say that buyers are tired and better prepared for the fact that reversal is possible. Ideally, it should form after a long upward trend. The higher, the better. The more empty space you see directly to the left of the pattern, the more likely it is that the pattern will develop in your favor.
If the price crosses the neck line and closes below it, this number is terminated. Conservative traders may be looking for additional reasons to confirm. The target can be assessed by measuring the height of the image (starting from the neck, ending on the head) and pulling it down. Usually, the stop lines are located just above the neck or right shoulder. The inverted head and shoulders are considered a stubborn version of this pattern, which can form after a downward trend. There is an intelligent tool on trading platforms that allows you to visually show this pattern in a graphic image.
400″> Is it ready to start trading on the figure of reversal of “head and shoulders”? If so, examine all head and shoulder patterns to maximize profits and minimize losses when trading them. This includes how to enter, where to put stop-loss, measured goals and more.
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