Head & Shoulders Stock Indices Chart Pattern

Head & Shoulders Stock Indices Trading Pattern Reversal Trading Signals

This is an upwards indices trend reversal stock indices trading pattern which forms after an extended Indices upwards trend. It's made up of 3 consecutive peaks, the left shoulder, head and the right shoulder with two moderate troughs between the shoulders.

This reversal trading strategy pattern is considered complete once stock indices price penetrates & moves below the neck line, which is drawn by joining these two troughs between the shoulders.

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

Summary:

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

Head & shoulders reversal strategy pattern can also form on a slanting neckline, like the stock indices trading examples explained below:

Up-wards Indices Trend Reversal Strategy - Head & shoulders Indices Chart Pattern

Up-wards Indices Trend Reversal Strategy - Head & shoulders Indices Chart Pattern

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