Im a total newbie here in the forex world, so forgive me for asking asking basic questions. First off is this a H&S near completion on the 4 hour chart? It seems to have all of the charactaristics. Im also hoping for advice on where to put my tp, I currently have mine set at .694 wich is about 61.8% retracement. I recently sold at its return to the top of its current channel figuring I wouldnt get hurt if all it did was head back down. The reason I think its near completion is it seems to be ending in a triangle. Any of the pros out there care to share their assesment?
-Joe
What pair you referring to?
Sorry, NZDUSD, posted in this forum, but forgot to include that.
The end of a H&S would be below the neckline imo. You can place TP by your risk/reward ratio or in this case support(if you have it going that low).
Do I have something wrong?
I thought one would be looking for a break of the neckline to consider an entry short. With s/l at the last shoulder height, and t/p slightly less than the length of the neck to head line.
That’s the traditional way to do it BUT definitely not the best way IMO. Forget about the term H&S for a minute. At reversal points what the market is doing is starting to make lower highs or higher lows with strong possibility of making a lower low or higher high respectively. Entering at a possible lower high or higher low(I use candle sticks to pick an entry) in anticipation of a lower low/higher high is a better entry IMO with a smaller stop and also a larger target level.
Also if you take a good look at MOST if not ALL H&S you will see that what has happened is a break and test of a up or down trend line. The left and center tips are already in place after this trend line break, what will/often happens next is a retrace to test the broken trend line creating the right tip or a lower high or higher low before the market continue to its extension.
You can run a test on what I just explain and will guarantee you will find it much more rewarding/accurate than entering at a break of the neckline. I will post a few examples later.
These are few examples showing a better(imo) and earlier entry at the right tip than the traditional neckline entry. In most if not all cases H&S are formed after the break and retest of a particular trend line, also they forms a lot at fib extensions signaling a possible reversal. The entries can be picked from reversal candle formations, highs or fib numbers being used as resistance or support.
