Head and Shoulders Stock Indices Chart Pattern

Head and Shoulders Indices Chart Pattern Reversal Indices Trading Signals

This is an upward indices trend reversal stock indices chart pattern that forms after an extended Indices Trading 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 reversal trading strategy pattern is considered complete once stock indices price penetrates below the neckline, which is drawn by joining the two troughs between the shoulders.

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

Summary:

• This reversal trading strategy pattern forms after an extended move upwards
• This reversal trading strategy pattern indicates that there will be a reversal in the stock indices trading market
• This reversal trading strategy pattern 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 indices price breaks below the neckline; as explained below:

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

Indices Upward Indices Trend Reversal Trading Strategy - Head and shoulders Indices Chart Pattern

Indices Upward Indices Trend Reversal Trading Strategy - Head and shoulders Indices Chart Pattern

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