Ticker tape by TradingView

Get 25% OFF our Trade Alerts & VIP Group

Click HERE and use code READER to get a discount on our gold membership

JOIN WITH CODE 'READER'

Head and Shoulders Pattern

Big Idea: A head and shoulders pattern marks when a potential reversal is coming in a market. The way the candles look is exactly how it’s described where a high, a higher high, and a lower high are formed in that order. It looks like two shoulders (lower highs) with a head (higher high) in between them.
On this chart, a first high is made before coming down and testing a bottom before bouncing to new highs. For a true head and shoulders pattern to form, there should be a common level of support underneath the shoulders. And, the uptrend in this picture eventually turned into a downtrend making this a real head and shoulders pattern.

Key Takeaways


-A head and shoulders pattern can help traders spot a reversal

-The pattern starts with one high followed by a higher high, and a low high

-There is often a common level where each shoulders find support

Resources

A1 Trading Company

A1 Trading Company is a financial services and media business founded in Atlanta, USA.
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram