What is a Head and Shoulders Pattern?

Head and Shoulders Pattern Psychology

  • Head and shoulders pattern — bearish reversal
  • Inverse head and shoulders pattern — bullish reversal

Head and Shoulders Pattern Psychology (Bearish Reversal)

Inverse Head and Shoulders Pattern Psychology (Bullish Reversal)

Head and Shoulders Pattern Trading Strategies

  1. Early Entry: Enter immediately
  2. Pre-Breakout Entry: Enter immediately
  3. Pullback Entry: Wait for a pullback after the breakout

Trading Strategy #1: Early Entry

Trading Strategy #2: Breakout Entry

Trading Strategy #3: Pullback Entry

Profit Target for the Head and Shoulders Pattern

Tips from the Trading Desk

  1. Make sure the trend is in the late stage — the longer the trend has been running, the more exhausted it is likely to be.
  2. Use the completed pattern for price projection — shoulders tend to be roughly the same height.
  3. The size of the pattern should be proportional to the trend it is trying to reverse.

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Trading, travelling & teaching across 60+ countries. Over 15 years of professional experience, and featured on more than 20 occasions in the media.

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Spencer Li

Spencer Li

Trading, travelling & teaching across 60+ countries. Over 15 years of professional experience, and featured on more than 20 occasions in the media.

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