How Do I Analyze Head and Shoulders Chart Pattern?

Trading XAUUSD Interpret Head and Shoulders Chart Pattern

Head and Shoulders Pattern is a reversal pattern which forms after an extended gold upwards trend.

Head and Shoulders Chart Gold Chart Pattern is made up of 3 consecutive xauusd price peaks, the left shoulder, the head and the right shoulder with 2 moderate xauusd price troughs between the two shoulders.

This Head and Shoulders Chart Pattern is considered to be complete once the xauusd price penetrates and moves below the neckline - the neckline is drawn by joining the two xauusd price troughs in between the two shoulders.

To open a sell gold trade after this gold reversal signal - traders will place their sell stop pending orders just below the neck line region.

Summary: Trading Gold Interpret Head and Shoulders Chart Pattern?

• Head & Shoulders Chart Pattern forms after an extended gold upward trend move
• Head & Shoulders Pattern signals that there will be a reversal in the upward trend
• Head & Shoulders Chart Pattern looks like a head with shoulders thus its name - head and shoulders pattern.
• To draw the neckline we use chart point 1 & chart point 2 as shown on the head and shoulders chart pattern example illustrated and explained below. We also extend this neckline in both directions.
• Gold traders will sell when the price breaks-out below the neck-line: as described on the head and shoulders chart pattern example illustrated and explained below.

How to Interpret Head & Shoulders Pattern? - How Do I Read Head & Shoulders Pattern?

The head and shoulders chart pattern can also form on a slanting neckline - like on the head and shoulders chart pattern example illustrated and explained below:

How to Interpret Head & Shoulders Pattern? - How Do I Read Head & Shoulders Pattern?

Analyze Head & Shoulders Pattern?

Interpret Head and Shoulders Chart Pattern

Head & Shoulders Pattern can also be formed on a slanting neck line - like on the head and shoulders chart pattern examples above - the neck line doesn't necessarily have to be horizontal.

How Do I Read Head and Shoulders Chart Pattern