How to Analyze Head and Shoulders Trading Pattern
How Do I Interpret Head and Shoulders Chart Pattern?
Head & Shoulders Chart Pattern is a reversal pattern which forms after an extended xauusd upward trend.
Head & Shoulders Chart Gold Pattern is made up of three consecutive gold price peaks, the left shoulder, the head & the right shoulder with two moderate gold price troughs between the 2 shoulders.
This Head & Shoulders Chart Pattern is considered to be complete once the gold price penetrates and moves below the neckline - the neckline is drawn by joining the two gold price troughs in between the two shoulders.
To open a sell xauusd trade after this xauusd reversal trading signal - traders will place their sell stop pending orders just below the neckline.
Summary: How Do You Interpret Head and Shoulders Chart Pattern?
- Head & Shoulders Chart Pattern forms after an extended xauusd upward trend move
- Head & Shoulders Chart Pattern signals that there will be a reversal in the upwards trend
- Head and Shoulders Pattern looks like a head with shoulders thus its name - head & shoulders chart pattern.
- To draw the neckline we use chart point 1 and chart point 2 as shown on the head and shoulders chart pattern example shown below. We also extend this neckline in both directions.
- XAUUSD traders will sell when the price breaks-out below neckline: as described on the head and shoulders chart pattern example shown below.
Interpret Head & Shoulders Chart Pattern
The head and shoulders chart pattern can also form on a slanting neckline - like on the head and shoulders chart pattern example shown below:
Interpret Head & Shoulders Chart Pattern
Head & Shoulders Chart Pattern on a Gold Chart - How to Analyze Head and Shoulders Chart Pattern
How Do You Interpret Head and Shoulders Chart Pattern
Head and Shoulders Pattern can also be formed on a slanting neckline - like on the head & shoulders pattern examples above - the neck line does not necessarily have to be horizontal.
Read Head and Shoulders Chart Pattern?
