Head and Shoulders Trading Pattern

Head & Shoulders Chart Pattern Reversal Trading Signals

This is an upwards commodity trend reversal trading pattern which forms after an extended Commodity upward 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 reversal trading strategy pattern is considered complete once commodities price penetrates and moves below the neckline, which is drawn by joining these two troughs between the shoulders.

This reversal commodity signal is confirmed once commodity prices move below the neck line

Summary:

• This reversal strategy pattern forms after an extended move upward
• This reversal trading strategy pattern indicates that there will be a reversal in commodities trading market
• This reversal trading strategy pattern resembles head with shoulders thus its name.
• To draw the neck-line we use chart point 1 and point 2 as shown below. We also extend this line in both directions.
• We sell when price breaks below the neck line: as is explained below:

Head and shoulders reversal strategy pattern can also form on a slanting neckline, like the commodities trading example shown below:

Upwards Commodity Trading Trend Reversal Trading Strategy - Head and shoulders Commodity Trading Chart Pattern

Upwards Commodity Trading Trend Reversal Trading Strategy - Head and shoulders Commodity Trading Chart Pattern

This reversal trading strategy pattern can also be formed on a slanting neckline, like the one above, the neck line does not have to be necessarily horizontal.