The Head And Shoulders pattern is essential in the stock market. This is also called a reversal pattern. Because its job is to reverse the market. Although there are many types of heads and shoulders, their function is only: to reverse the market and change its direction.
This pattern is mainly performed over at the bottom of the market. Head and shoulders are very reliable trend reversal patterns. This pattern has an identical degree of accuracy, indicating the uptrend ends are very near. Head and shoulders practices are performed when the market reaches its top.
In the photo given above, there are two types of head and shoulders, the First is Bullish, and the second is bearish.
What Is a Head And Shoulders Pattern?
The head and shoulders are chart formation patterns based on the three peaks. The height of the shoulders inside which is almost equal. And the head height is more than the shoulders. The head is always performed in the middle of this candle sticks pattern.
First, the right shoulder will be formed. And after that, the head will be included, and the left shoulder will be formed after the head and shoulder are performed. And this pattern is a reversal pattern.
When performing, the market will take a U-turn from the top. This IS not a typical pattern. It is a unique pattern.
What is an Inverted Head And Shoulder Pattern?
This pattern is mainly formed to bring the market up from the bottom. In this pattern, first, the left shoulder is included. Then the head is started immediately. After that, the right shoulder is also included. This pattern is mainly created to end a downtrend in the market.
Whenever this pattern is performed, after that, the market will take a hundred percent U-turn from there; that is, it will start moving from the bottom up.
There is a rule in the market that always never forget to follow your rules. If you are working on head and shoulder patterns, you should work on the same and not find new technology daily.
When To Buy On Bullish Head And Shoulder Pattern –
We have seen at the bottom the head and shoulders have been performed, but how can we take the trade on it? Before entering the trading. We have to know before the work where this pattern is completed.
This means this pattern is performed at the bottom so that the market will go upside down soon. Now let’s talk about where we have to buy. We first have to see where the neckline breaks down the head and shoulders and how much the difference is between the head and shoulders. Find videos related to these patterns on YouTube.
If the gap between the head and shoulder is,s the better. Because it is a belief that the more gap, the more performance it will give, meaning it will move very sharply up or down. The better our trade will be.
According to this pattern, as soon as the neckline breaks. Then we have to put the trade on this pattern. After bricks the neckline, the market started moving from the upside to the downside or downside to the upside. Our stop loss will be precisely below the head with a little buffering.
One thing to remember is that we either have to hit the stop loss or hit our target. Before these, we don’t have to hit anything because sometimes we panic and close our trade, and we start to regret the latter so that We make a profit later but leave with minimal gain.
How To Trade Bearish Head And Shoulder Patterns?
Now it comes to how to trade on this pattern. Because in the pattern chart, we have been telling this is head and shoulders have performed. Now it is also a matter of how to trade on it because without training or practice,e we can never become a successful trader. So now let’s talk about how we will change this.
Friends, like we have done a bullish head and shoulder trade, in the same way, we can trade bearish side too. Just the head and shoulders are made at the top, and after that, the market comes down; as soon as the market the brake out of the neckline, at the same time, we will put the trade on the sell side.
And our stop loss will be up a bit on the neck with buffering. And our target will be to double the gap between the neck and the neckline. Don’t forget to watch a video related to this topic.
Key Point Of Head And Shoulders?
- They always made top and bottom.
- They always end the trend.
- Never trade without the stop loss.
- Please follow the higher time frame.
- Always book your profit from time to time.