Forex Upward Trend Reversal Strategy - Head and Shoulders Chart Pattern Reversal

Head & Shoulders Pattern Reversal Signals

This is an upwards trend reversal chart pattern which forms after an extended Forex uptrend. It is made up of three consecutive peaks, left shoulder, head & right shoulder with two moderate troughs between the shoulders.

This reversal trading strategy pattern is considered complete once price penetrates below the neckline, which is plotted by joining the two troughs between the shoulders.

This reversal forex trading signal is confirmed once forex prices move below the neck line

Summary:

• This reversal strategy pattern forms after an extended move upward
• This reversal trading strategy pattern indicates that there will be a reversal in market
• This reversal trading strategy pattern resembles head with shoulders thus its name.
• To plot 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 neckline: as explained below:

Head & Shoulders reversal trading strategy pattern can also form on a slanting neck line, like the example below:

Forex Upward Trend Reversal Strategy - Head and Shoulders Chart Pattern

Forex Upward Trend Reversal Strategy - Head and Shoulders Chart Pattern

This reversal trading strategy pattern can also be formed on a slanting neck line, like the one above, neck line doesn't have to be necessarily horizontal.