How to Oil Trade Head & Shoulders Oil Trading Chart Pattern

Oil Interpret Head & Shoulders Oil Trading Chart Patterns

Head & Shoulders Oil Trading Pattern

Head and Shoulders Oil Trading Chart Pattern is a reversal crude oil pattern which forms after an extended Oil Trading upwards trend.

Head & Shoulders Oil Pattern is made up of three consecutive peaks, the left shoulder, the head & the right shoulder with two moderate troughs between the 2 shoulders.

This Head & Shoulders Oil Trading Pattern is considered complete once oil trading price penetrates and moves below neck line, which is plotted by connecting these 2 troughs in between the shoulders.

To open a sell oil trade after this reversal oil trading signal, Oil traders place their sell stop oil orders just below the neck line.

Summary:

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

Analysis of Head and Shoulders Oil Trading Chart Patterns?

Or the head and shoulders crude oil pattern can also form on a slanting neck line, like the crude oil trading example explained below:

Analysis of Head and Shoulders Oil Trading Chart Patterns?

Example of Head and Shoulders Oil Trading Pattern on a Oil Trading Chart

How to Trade the Head and Shoulders Oil Trading Chart Pattern

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