Reversal Chart Patterns: Head and Shoulders & Reverse Head Shoulders
Head and shoulders Commodity Trading Chart Pattern
This is a reversal chart pattern which forms after an extended Commodity upward trend. It's made up of three consecutive peaks, the left shoulder, head and right shoulder with two moderate troughs between the shoulders.
This commodity trading pattern is considered complete once commodities price penetrates below the neckline, which is drawn by joining these two troughs between the shoulders.
To go short, Commodity traders place their sell stop pending orders just below neckline.
Summary:
- This Commodity Trading pattern forms after an extended move upwards
- This formation indicates that there will be a reversal in commodities trading market
- This formation resembles head with shoulders thus its name.
- To draw the neck-line we use chart point 1 & point 2 as shown below. We also extend this line in both directions.
- We sell when price breaks below the neck line: see the chart below for explanation.
Or the head & shoulders can also form on a slanting neck line, like the commodities trading example shown below:
Example of Head & Shoulders Pattern on a Commodity Trading Chart
Head and Shoulders Pattern
This commodities pattern can also be formed on a slanting neck line, like the one above, the neck-line doesn't have to be necessarily horizontal.
Reverse Head and Shoulders Trading Pattern
This is a reversal head and shoulders pattern which forms after an extended Commodities Trading downwards commodity trend. It resembles an upside-down head shoulders.
This commodity trading pattern is considered complete once commodity trading price penetrates above the neckline, which is drawn by joining these two peaks between the reverse shoulders pattern.
To go long buyers place their buy stop pending orders just above neckline.
Summary:
- This Commodity Trading pattern forms after an extended move downwards
- This formation indicates that there will be a reversal in commodities trading market
- This formation resembles upside-down, hence the name Reverse.
- We buy when price breaks above the neck line: see the chart below for explanation.
Example of Reverse Head & Shoulders Pattern on a Commodity Trading Chart
Examples of Reverse Head & Shoulders Pattern
