Technical Analysis of Head and Shoulders Indices Chart Patterns?

How to Analyze Head and Shoulders Indices Chart Patterns?

Head and Shoulders Indices Chart Pattern

Head and Shoulders Indices Chart Pattern is a reversal stock indices chart pattern that forms after an extended Indices Trading upward trend.

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

This Head and Shoulders Indices Chart Pattern is considered complete once stock indices price penetrates below the neckline, which is drawn by joining the two troughs between the shoulders.

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

Summary:

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

Technical Analysis of Head and Shoulders Indices Chart Patterns?

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

Technical Analysis of Head and Shoulders Indices Chart Patterns?

Example of Head and Shoulders Indices Pattern on a Indices Chart

How to Analyze Head and Shoulders Indices Chart Patterns?

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