Head and shoulders pattern

Beginner Questions Candlesticks, Chart Patterns, and Price Action
1

Hi guy can someone please confirm that this is a legitimate H&S pattern. This formed at the top of an uptrend

https://www.tradingview.com/x/wXalKzSU/

2

It has a head and left and right shoulders, with a neck-line. The downward slope of the neck-line MIGHT indicate a more extended and/or urgent downward move may occur than if it was horizontal or upwards-sloping.

Note that if price rises from here, that does not prove this was NOT a H&S, just that the H&S signal failed. Either way, you can’t know that in real-time so you just have to trade it according to its own rules.

2 Likes
3

Thanks heaps for your reply tommor. Much appreciated

4

Looks too stretched and the Left…Head…Right…loo far away from each other to be a Head and Shoulders.

Right Shoulder looks more like a Double Bottom or the early stages of a Consolidation

k

Ideally should be closer…

Duane
DRFXTRADING

1 Like
5

In a loose sense (this pattern has some issues like relative shoulder size, slant, etc, but still could pass for one) I would say yeah, albiet a failed one. Price would have had to have broken the neck line to confirm it. It may just become a sideways range if price goes back up to the shoulder/head area and then back down again. Sometimes you can get a complex H&S which has 2 shoulders on each side, but those types of patterns have some strict rules, and clearly not what this specific setup is.

Also I like to see the neckline slanting away from the breakout, not with it. A slant away from the breakout is more bearish, kind of like the slant in a flag pattern is opposite the breakout bias direction.

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6

Thanks krugman25 - the learning continues

1 Like
7

Sometimes they only have a Centre/Head and Right Shoulder/Tip without the Left Part…but still lead to a successful trend change…

I recently took advantage of one on the AUD JPY Daily Chart…

20180614_153139.png1642Ă—999 93.7 KB

20180619_014515.png1646Ă—997 75 KB

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So sometimes they dont follow the text book examples we learnt.

Check out this video of the trade that also shows how this setup can have different interpretations.

Duane
DRFXTRADING

8

Head and shoulders is the best option for the traders. Many professional traders follows that pattern for trading. They also suggest that pattern to the other traders to follow due to its steong indication power. I also suggest you to follow this pattern. Thanks