Reversal Chart Patterns Head and Shoulders & Reverse Head and Shoulders
Head and Shoulders Reversal Chart Pattern
This is a reversal chart pattern that forms after an extended Gold price upwards trend. It's made up of three consecutive peaks, the left shoulder, the head and the right shoulder with two moderate troughs between the shoulders.
This Head and Shoulders Reversal Pattern is considered complete once 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 orders just below the neckline.
Summary:This reversal chart pattern forms after an extended move upwards
This formation indicates that there'll be a reversal in the market
This formation resembles head with shoulders thus its name.
To plot the neck-line we use chart point 1 and point 2 as illustrated below. We also extend this line in both directions.
We sell when price breaks below the neckline: see the chart below for explanation.
Or the head & shoulders can also form on a slanting neck-line, like the example below:
Example of Head and Shoulders Pattern on a Gold Price Chart
Head & Shoulders Pattern
This reversal pattern can also be formed on a slanting neckline, like the one above, the neckline does not have to be necessarily horizontal.
Reverse Head & Shoulders Reversal Chart Pattern
This is a reversal head & shoulders chart pattern that forms after an extended Gold downwards trend. It resembles an upside-down head and shoulders pattern.
This Head and Shoulders Reversal Pattern is considered complete once price penetrates above the neckline, which is drawn by joining the two peaks between the reverse head and shoulders pattern.
To go long buyers place their buy stop orders just above the neckline.
Summary:This reversal pattern forms after an extended move downwards
This formation indicates that there'll be a reversal in the market
This formation resembles an upside-down head and shoulders pattern, thus its name Reverse.
We buy when price breaks above the neckline: see the chart below for explanation.
Example of Reverse Head & Shoulders Chart Pattern on a Gold Price Chart
Reverse Head & Shoulders Pattern
