Head and Shoulders

Updated: Mar 8

A head and shoulder pattern typically looks like someone is standing in-front of you. You will use this to predict a buy or sell position, your right shoulder will most commonly be that indicator. Sometimes it will be difficult to spot a Head and Shoulders pattern, the Neckline can be at any angle and as soon as you start plotting your horizontal lines you will clearly see the pattern.

As soon as there is a break-out we can assume there will be a Trend Reversal either bullish or bearish.

You will not, as a example, want to buy shares in the right shoulder position if the Head and Shoulders formed during an uptrend. If you missed the right shoulder opportunity, sell or buy after the breakout position depending on the trend it was following.

Here is another good example with some formulas to estimate the new level of resistance or support after the break-out.

Happy Investing!

80 views0 comments

Recent Posts

See All