Reversal Patterns | Head and Shoulders | Double Top.
Reversal Patterns, there are many patterns but today.
I will discuss only two patterns that are the head and shoulders and the double top pattern.
All reversal patterns mean a failure of the market to move in a particular direction continuous failed attempts to lead the market to reverse.
Head and Shoulders
The head and shoulders, first we need an uptrend that will be comprised of three failed attempts to break out.
And result in a reversal of the uptrend.
Now, this is a support area however we say the neckline.
Once the neckline breaks down the pattern will consider completing the inverted version of the head and shoulders.
Keep in mind that the left and right shoulders may or may not be equal in size but the head must be upper by both shoulders.
And if neckline crossed by prices and sustain down to neckline so it means seller took control and it may price further go down.
Selling with Head and Shoulders Reversal Patterns
Before going to start trade with head and shoulder pattern so keep in mind that what kind of steps or confirmation are to trade.
First, you have to draw a trendline from point A to point B and that is called the Support or (Neckline).
Second, you have to wait until the crossed candle closes below the support line.
And then you may go for sale trade after closing candle that means new opening candle after that closing candle.
Exit Strategy for Selling with H.A.S.
Place your Stop Loss on high of the closing candle above the neckline.
and keep at least 30 pips for trailing Stop and then won’t put for target profit if you’re using a trailing stop.