Reversal Commodities Trading Chart Patterns: Head and Shoulders & Reverse Head Shoulders
Head and shoulders Commodities Trading Chart Pattern
This is a reversal commodity chart pattern that forms after an extended Commodity Trading upward commodities 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 commodity pattern is considered complete once commodities price penetrates below the neckline, which is drawn by joining the two troughs between the shoulders.
To go short, Commodities traders place their sell stop commodity orders just below the neckline.
Summary:
- This Commodity Trading pattern forms after an extended move upwards
- This formation indicates that there will be a reversal in the commodity 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 commodities price breaks below the neckline; see the chart below for explanation.
Or the head and shoulders can also form on a slanting neckline, like the commodity example illustrated and explained below:
Example of Head and Shoulders Pattern on a Commodity Trading Chart
Head and Shoulders Pattern
This commodity 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 Commodities Trading Chart Pattern
This is a reversal head and shoulders pattern that forms after an extended Commodity Trading downward commodity trend. It resembles an upside-down head shoulders.
This commodity pattern is considered complete once commodities 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 commodity orders just above the neckline.
Summary:
- This Commodity Trading pattern forms after an extended move downwards
- This formation indicates that there will be a reversal in the commodity market
- This formation resembles is upside-down, thus its name Reverse.
- We buy when commodities price breaks above the neckline; see the chart below for explanation.
Example of Reverse Head and Shoulders Pattern on a Commodity Trading Chart
Example of Reverse Head and Shoulders Pattern
