Indices Price Breakout after Head & Shoulders Pattern

Head & Shoulders Chart Pattern is a reversal stock indices pattern which forms after an extended Indices Trading upward trend.

Head & Shoulders Chart Pattern is made up of 3 consecutive peaks, left shoulder, head & right shoulder with two moderate troughs between the two shoulders.

To open a sell indices trade after this head and shoulders reversal indices trading signal, Indices traders place their sell stop pending orders just below neckline.

Summary:

• This Head & Shoulders Chart Pattern forms after an extended move upwards -indices upward trend
• This Head & Shoulders Chart Pattern formation indicates that there will be a reversal in stock indices trading market
• This Head & Shoulders Chart Pattern formation looks like a head with shoulders thus its name.
• To draw the neck-line we use chart point 1 & point 2 as illustrated on the stock indices trading examples explained below. We also extend this line in both directions.
• We sell when stock indices price breaks-out below neck-line: as described on the stock indices trading examples explained below.

What Happens to Indices Price Action After a Head & Shoulders Chart Setup?

Or the head & shoulders stock indices chart pattern can also form on a slanting neck line, like the stock indices trading examples explained below:

What Happens to Indices Price Action After a Head & Shoulders Chart Setup?

Examples of Head & Shoulders Indices Pattern on a Indices Chart

Indices Price Breakout after Head & Shoulders Pattern

This Head & Shoulders Chart Pattern can also be formed on a slanting neck line, like the head and shoulders stock indices chart pattern examples above, the neck line does not have to be necessarily horizontal.