Reversal Chart Patterns Head and Shoulders & Reverse Head and Shoulders

Head and Shoulders Reversal Chart Pattern

This is a reversal chart pattern setup that forms after an extended Gold price upwards trend. It is made up of three consecutive peaks, the left shoulder, the head and the right shoulder with 2 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 setup forms after an extended move upward

This formation indicates that there will be a reversal in the market

This formation resembles head with shoulders thus its name.

To plot the neck-line we use 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.

Reversal Gold Chart Patterns

Or the head & shoulders also can form on a sloping neck-line, like the example below:

Head & Shoulders Gold Trading Chart Pattern Technical analysis Explained

Example of Head and Shoulders Pattern on a Gold Price Chart

Head & Shoulders Gold Chart Pattern - Reversal Gold Trading Chart Patterns Explained

Head & Shoulders Pattern

This reversal pattern can also be formed on a sloping 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 setup 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 will 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.

Reverse Head & Shoulders Gold Chart Pattern