What Does Head and Shoulders Oil Chart Pattern Mean?

Head and Shoulders Oil Trading Pattern is a reversal crude oil chart pattern that forms after an extended Oil Trading upward trend.

Head and Shoulders Oil Trading Chart Pattern is made up of 3 consecutive peaks, the left shoulder, the head and the right shoulder with 2 moderate troughs between the 2 shoulders.

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

Summary:

• This Head & Shoulders Oil Trading Pattern forms after an extended move upwards - oil upwards trend
• This Head & Shoulders Oil Pattern formation indicates that there will be a reversal in crude oil market
• This Head & Shoulders Oil Chart Pattern formation resembles a head with shoulders thus its name.
• To draw the neck-line we use chart point 1 and 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 the neck-line: as explained on the crude oil trading example explained below.

What Happens To Oil Trading Price Action After a Head and Shoulders Oil Trading Chart Pattern?

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

What Happens To Oil Trading Price Action After a Head and Shoulders Oil Trading Chart Pattern?

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

How to Analyze the Head and Shoulders Oil Trading Chart Pattern

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