Reversal Gold Chart Patterns: Head and Shoulders & Reverse Head Shoulders

Head and shoulders Gold Chart Pattern

This is a reversal xauusd chart pattern that forms after an extended XAUUSD Trading upward gold trend. It is made up of three consecutive peaks, the left shoulder, the head and the right shoulder with two moderate troughs between the shoulders.

This xauusd pattern is considered complete once gold price penetrates below the neckline, which is drawn by joining the two troughs between the shoulders.

To go short, XAUUSD traders place their sell stop xauusd orders just below the neckline.

Summary:

• This XAUUSD Trading pattern forms after an extended move upwards
• This formation indicates that there will be a reversal in the xauusd market
• This formation resembles head with shoulders thus its name.
• To draw the neckline we use chart point 1 and point 2 as shown below. We also extend this line in both directions.
• We sell when gold price breaks below the neckline; see the chart below for explanation.

Or the head and shoulders can also form on a slanting neckline, like the xauusd example shown below:

Example of Head and Shoulders Pattern on a XAUUSD Chart

Head and Shoulders Pattern

This xauusd chart pattern can also be formed on a slanting neckline, like the one above, the neckline does not have to be necessarily horizontal.

Reverse Head and shoulders Gold Chart Pattern

This is a reversal head and shoulders pattern that forms after an extended XAUUSD Trading downward xauusd trend. It resembles an upside-down head shoulders.

This xauusd pattern is considered complete once gold price penetrates above the neckline, which is drawn by joining the two peaks between the reverse shoulders.

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

Summary:

• This XAUUSD Trading pattern forms after an extended move downwards
• This formation indicates that there will be a reversal in the xauusd market
• This formation resembles is upside-down, thus its name Reverse.
• We buy when gold price breaks above the neckline; see the chart below for explanation.

Example of Reverse Head and Shoulders Pattern on a XAUUSD Chart

Example of Reverse Head and Shoulders Pattern