Upward Stocks Trend Reversal Trading Strategy

Head and Shoulders Trading Pattern Reversal Stocks Signals

This is an upward stocks trend reversal chart pattern that forms after an extended Stocks upward stock trend. It is made up of three consecutive peaks, the left shoulder, the head & the right shoulder with 2 moderate troughs between the shoulders.

This reversal strategy pattern is considered complete once stocks price penetrates and moves below the neck line, which is plotted by connecting these 2 troughs in between the shoulders.

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

Summary:

• This reversal trading strategy pattern forms after an extended move upward
• This reversal strategy pattern indicates that there will be a reversal in stocks market
• This reversal strategy pattern resembles head with shoulders thus its name.
• To draw the neck-line we use chart point 1 & point 2 as displayed below. We also extend this line in both directions.
• We sell when the price breaks below the neck line: as is explained below:

Head & shoulders reversal trading strategy pattern can also form on a slanting neck line, like the stocks example illustrated and explained below:

Upwards Stocks Trend Reversal Strategy - Head & shoulders Stock Chart Pattern

Upwards Stocks Trend Reversal Strategy - Head & shoulders Stock Chart Pattern

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