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

Head and shoulders Stocks Trading Pattern

This is a reversal stock pattern that forms after an extended Stock upward stocks 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 stock trading pattern is considered complete once stocks price penetrates and moves below the neck line, which is plotted by joining these two troughs between the shoulders.

To go short, Stock traders place their sell stop stock orders just below the neckline.

Summary:

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

Reversal Stock Patterns

Or the head & shoulders can also form on a slanting neckline, like the stocks examples illustrated & described below:

Slanting Head and Shoulder Stock Chart Pattern

Examples of Head & Shoulders Pattern on a Stock Chart

Example of Head and Shoulders Pattern on a Stock Chart

Head & Shoulders Pattern

This stocks pattern can also be formed on a slanting neckline, like the one above, the neck line doesn't have to be necessarily horizontal.

Reverse Head & Shoulders Stocks Trading Pattern

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

This stock trading pattern is considered complete once stocks price penetrates above the neck-line, which is plotted by joining these two peaks between the reverse shoulders pattern.

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

Summary:

This Stock pattern forms after an extended move downwards
This formation indicates that there will be a reversal in the stock market
This formation resembles upside down, therefore the name Reverse.
We buy when stocks price breaks above the neck line: see the chart below for explanation.

How to Trade Reverse Head and Shoulders Stocks Pattern