How Do I Trade Head and Shoulders Chart Pattern?
How to Trade the Head and Shoulders Chart Pattern
Head & Shoulders Trading Pattern
Head & Shoulders Pattern is a reversal chart pattern that forms after an extended Gold Trading upward trend.
Head and Shoulders Chart Pattern is made up of 3 consecutive peaks, the left shoulder, the head & the right shoulder with 2 moderate troughs between the two shoulders.
This Head and Shoulders Chart Pattern is considered complete once xauusd price penetrates and moves below the neckline, which is drawn by joining the two troughs between the shoulders pattern.
To open a sell gold trade after this reversal gold trading signal, Gold traders place their sell stop xauusd trade orders just below neck line.
Summary:
- This Head and Shoulders Pattern forms after an extended move upward - gold upwards trend
- This Head & Shoulders Chart Pattern formation indicates that there will be a reversal in the xauusd market
- This Head & Shoulders Chart Pattern formation looks like a head with shoulders thus its name.
- To draw the neck-line we use chart point 1 and point 2 as illustrated on the xauusd examples illustrated and described below. We also extend this line in both directions.
- We sell when the price breaks-out below neck-line: as described on the xauusd trading example illustrated and explained below.
Gold Trade Head and Shoulders Chart Pattern?
Or the head & shoulders chart pattern can also form on a slanting neck line, like the xauusd trading example illustrated and explained below:
Gold Trade Head and Shoulders Chart Pattern?
Examples of Head & Shoulders Gold Pattern on a Gold Chart
How to Trade the Head and Shoulders Chart Pattern
This Head & Shoulders Chart Pattern can also be formed on a slanting neckline, like the head & shoulders pattern examples above, the neckline does not have to be necessarily horizontal.
