What's Head and Shoulders Crude Oil Trading Chart Patterns in Oil Trading?

Trading Crude Oil Identify a Head & Shoulders Trading Pattern in Oil Trading

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This Head & Shoulders patterns charts guide explains how to identify crude oil patterns - identifying crude oil chart patterns is the first step when it comes to learning how to oil trade with Head and Shoulders crude oil chart patterns in Oil Trading.

Head & Shoulders crude oil price patterns commonly form on Oil Trading charts & this crude oil chart pattern analysis guide explains how to trade and analyze oil charts using Head and Shoulders crude oil trading patterns.

Head and Shoulders Crude Oil Trading Chart Pattern

Head and Shoulders Oil Trading Chart Pattern is a reversal crude oil pattern which forms after an extended Oil Trading upwards oil trend. Head and Shoulders Oil Trading Pattern is made up of 3 consecutive peaks, the left shoulder, the head and the right shoulder with two moderate troughs between the 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 go short, Oil traders place their sell stop oil orders just below the neck line.

Summary:

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

What is Head and Shoulders Crude Oil Trading Chart Patterns in Oil Trading?

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

Trading Crude Oil Identify a Head & Shoulders Trading Pattern in Oil Trading?

Examples of Head & Shoulders Pattern on a Oil Trading Chart

Trading Crude Oil Identify a Head & Shoulders Trading Pattern in Oil Trading?

This Head & Shoulders Oil Trading Chart Pattern can also be formed on a slanting neckline, like the one above, the neck line does not have to be necessarily horizontal.