What Happens To Commodity Trading Price Action After a Head and Shoulders Chart Pattern?

Head & Shoulders Chart Pattern is a reversal pattern that forms after an extended Commodity Trading upwards trend.

Head & Shoulders Chart Pattern is made up of 3 consecutive peaks, the left shoulder, the head & the right shoulder with two moderate troughs between the two shoulders.

To open a sell commodity trade after this head and shoulders reversal commodity trading signal, Commodity traders place their sell stop orders just below the neck line region.

Summary:

• This Head & Shoulders Pattern forms after an extended move upward - commodity upward trend
• This Head and Shoulders Chart Pattern formation indicates that there will be a reversal in commodities trading market
• This Head and Shoulders Chart Pattern formation looks like a head with shoulders thus its name.
• To draw the neck-line we use chart point 1 & point 2 as illustrated on the commodities trading example shown below. We also extend this line in both directions.
• We sell when price breaks-out below the neck-line: as described on the commodities trading example shown below.

What Happens To Commodity Trading Price Action After a Head and Shoulders Chart Pattern?

Or the head & shoulders chart pattern can also form on a slanting neck line, like the commodities trading example shown below:

What Happens To Commodity Trading Price Action After a Head and Shoulders Chart Pattern?

Examples of Head and Shoulders Trading Pattern on a Commodity Trading Chart

How to Analyze the Head and Shoulders Chart Pattern - Commodity Trading Price Breakout after Head and Shoulders Pattern

This Head & Shoulders Chart Pattern can also be formed on a slanting neck line, like the head and shoulders chart pattern examples above, the neckline does not have to be necessarily horizontal.