Trade Stock Indices

Learn Stock Indices Trading

Reversal Indices Trading Chart Patterns: Head and Shoulders & Reverse Head Shoulders

Head and shoulders Indices Trading Chart Pattern

This is a reversal stock indexes chart pattern that forms after an extended Indices upward indices trend. It is made up of three consecutive peaks, the left shoulder, the head and the right shoulder with two moderate troughs between the shoulders.


This indices trading pattern is considered complete once stock indexes price penetrates below the neckline, which is drawn by joining the two troughs between the shoulders.


To go short, Indices traders place their sell stop indices orders just below the neckline.


Summary:


  • This Indices pattern forms after an extended move upwards

  • This formation indicates that there will be a reversal in the stock indexes trading market

  • This formation resembles head with shoulders thus its name.

  • To draw the neckline we use chart point 1 and point 2 as shown below. We also extend this line in both directions.

  • We sell when stock indexes price breaks below the neckline; see the chart below for explanation.

Reversal Indices Trading Chart Patterns


Or the head and shoulders can also form on a slanting neckline, like the stock indexes trading example explained and illustrated below:

Slanting Head and Shoulder Indices Trading Chart Pattern


Broker


Example of Head and Shoulders Pattern on a Indices Trading Chart

Example of Head and Shoulders Pattern on a Indices Trading Chart

Head and Shoulders Pattern


This stock indexes chart pattern can also be formed on a slanting neckline, like the one above, the neckline does not have to be necessarily horizontal.



Reverse Head and shoulders Indices Trading Chart Pattern

This is a reversal head and shoulders pattern that forms after an extended Indices downward indices trend. It resembles an upside-down head shoulders.


This indices trading pattern is considered complete once stock indexes price penetrates above the neckline, which is drawn by joining the two peaks between the reverse shoulders.


To go long buyers place their buy stop indices orders just above the neckline.


Summary:


  • This Indices pattern forms after an extended move downwards

  • This formation indicates that there will be a reversal in the stock indexes trading market

  • This formation resembles is upside-down, thus its name Reverse.

  • We buy when stock indexes price breaks above the neckline; see the chart below for explanation.

Reverse Head and shoulders Indices Trading Chart Pattern


Example of Reverse Head and Shoulders Pattern on a Indices Trading Chart



Reverse Head and shoulders Indices Trading Chart Pattern in Indices Trading

Example of Reverse Head and Shoulders Pattern

 

Forex Seminar Gala


Forex Seminar




Broker