Trade Forex Trading

Reversal Setups Head and Shoulders and Reverse/Inverse Head and Shoulders

Head and Shoulders Reversal Setup

This is a reversal pattern setup formation that forms after an extended XAUUSD price upward trend. It's made up of 3 consecutive peaks, the left shoulder, the head & the right shoulder with 2 moderate troughs between the shoulders pattern.

A Head and Shoulders reversal formation is complete when the price breaches the neckline plotted by connecting the two troughs within the pattern.

To go short, XAU USD traders place their sell stop orders just below the neckline.

Summary:This reversal setup forms after an extended move upward

This setup reflects that there'll be a reversal in the market

This setup resembles and looks like head with shoulders thus its title.

To create the neckline, we utilize chart point 1 and point 2 as illustrated below. Additionally, we extend this line in both directions.

We initiate a sell when the price breaks below the neckline: refer to the chart below for clarification.

Reversal XAUUSD Trading Chart Setups

Alternatively, the head and shoulders formation can manifest with an inclined neckline, as illustrated underneath:

Reversal Gold Trading Setups

Explanation of Head Shoulders Setup on a XAU/USD Price Chart

Head and Shoulders Reversal XAUUSD Pattern and Reverse/Inverse Head & Shoulders Reversal XAUUSD Pattern

Head & Shoulders Setup

This reversal pattern can form on a sloped neckline too, like the one shown. The neckline does not need to be flat.

Reverse Head and Shoulders Reversal Pattern

This head and shoulders setup happens after a long XAUUSD fall. It looks like a head & shoulders pattern turned upside down.

This Head and Shoulders Reversal Pattern is regarded complete once the price penetrates above the neckline, which is plotted by joining the two peaks between the reverse head and shoulders pattern.

To go long buyers/bulls place their buy stop orders just above the neckline.

Summary:This reversal setup forms after an extended move downward

This setup shows a market turn is coming.

This configuration resembles an inverted head and shoulders pattern, hence its designation as Reverse.

Buy when price crosses above the neckline, as shown in the chart.

Reversal Gold Setups - Head & Shoulders Gold Setup and Reverse/Inverse Head and Shoulders Gold Setup

Explanation of Reverse/Inverse Head and Shoulders Setup on a XAU/USD Price Chart

Reversal Gold Trading Chart Setups

Reverse Head and Shoulders Setup

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