How Do I Trade Head & Shoulders Chart Pattern?

How Do I Trade the Head & Shoulders Chart Setup

Head & Shoulders Pattern

Head and Shoulders Pattern is a reversal pattern that forms after an extended Gold Trading up-ward trend.

Head & Shoulders Pattern is made up of three consecutive peaks, the left shoulder, the head & the right shoulder with two moderate troughs between the two shoulders.

This Head and Shoulders Chart Pattern is considered complete once price penetrates and moves below the neck line, which's drawn by joining the two troughs between the shoulders setup.

To open a sell trade after this reversal setup, traders place their sell stop xauusd trade orders just below neck line.

Summary:

• This Head and Shoulders Pattern forms after an extended move upward - gold upwards trend
• This Head and Shoulders Pattern formation indicates that there'll be a reversal in the market
• This Head & Shoulders Pattern formation looks like a head with shoulders thus its name.
• To draw the neck line we use chart point 1 and point 2 as illustrated on the examples illustrated & described below. We also extend this line in both directions.
• We sell when the price breaks-out below neck-line: as described on the example shown & explained below.

Trade Head and Shoulders Chart Setup?

Or the head & shoulders chart pattern setup also can form on a sloping neck line, like the example shown and described below:

Trade Head & Shoulders Chart Setup?

Example of Head and Shoulders Pattern on a Trading Chart

How Do I Trade the Head & Shoulders Chart Setup

This Head and Shoulders Pattern also can be formed on a sloping neck line, like the head and shoulders setup examples above, the neck line doesn't have to be necessarily horizontal.

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