Reversal Gold Chart Patterns: Head and Shoulders & Reverse Head Shoulders

Head and shoulders XAUUSD Chart Pattern

This is a reversal xauusd chart pattern that forms after an extended Gold upward xauusd trend. It is made up of three consecutive peaks, the left shoulder, the head and the right shoulder with two moderate troughs between the shoulders.

This gold pattern is considered complete once xauusd price penetrates below the neckline, which is drawn by joining the two troughs between the shoulders.

To go short, Gold traders place their sell stop gold orders just below the neckline.

Summary:

• This Gold pattern forms after an extended move upwards
• This formation indicates that there will be a reversal in the xauusd market
• This formation resembles head with shoulders thus its name.
• To draw the neckline we use chart point 1 and point 2 as shown below. We also extend this line in both directions.
• We sell when xauusd price breaks below the neckline; see the chart below for explanation.

Or the head and shoulders can also form on a slanting neckline, like the xauusd trading example illustrated and explained below:

Example of Head and Shoulders Pattern on a Gold Chart

Head and Shoulders Pattern

This xauusd chart pattern can also be formed on a slanting neckline, like the one above, the neckline does not have to be necessarily horizontal.

Reverse Head and shoulders XAUUSD Chart Pattern

This is a reversal head and shoulders pattern that forms after an extended XAUUSD downward gold trend. It resembles an upside-down head shoulders.

This gold pattern is considered complete once xauusd price penetrates above the neckline, which is drawn by joining the two peaks between the reverse shoulders.

To go long buyers place their buy stop gold orders just above the neckline.

Summary:

• This Gold pattern forms after an extended move downwards
• This formation indicates that there will be a reversal in the xauusd market
• This formation resembles is upside-down, thus its name Reverse.
• We buy when xauusd price breaks above the neckline; see the chart below for explanation.

Example of Reverse Head and Shoulders Pattern on a Gold Chart

Example of Reverse Head and Shoulders Pattern