What Does Head and Shoulders Chart Pattern Mean?
Head and Shoulders Chart Pattern is a reversal chart pattern that forms after an extended Gold Trading upward trend.
Head and Shoulders Chart Pattern is made up of three consecutive peaks, the left shoulder, the head and the right shoulder with two moderate troughs between the two shoulders.
To open a sell gold trade after this head and shoulders reversal gold trading signal, Gold traders place their sell stop orders just below the neckline.
Summary:
- This Head and Shoulders Chart Pattern forms after an extended move upwards - gold upward trend
- This Head and Shoulders Chart Pattern formation indicates that there will be a reversal in the xauusd market
- This Head and Shoulders Chart Pattern formation resembles a head with shoulders thus its name.
- To draw the neckline we use chart point 1 and point 2 as shown on the xauusd trading example illustrated and explained below. We also extend this line in both directions.
- We sell when price breaks below the neckline: as explained on the xauusd trading example illustrated and explained below.
What Does Head and Shoulders Chart Pattern Mean?
Or the head and shoulders chart pattern can also form on a slanting neckline, like the xauusd trading example illustrated and explained below:
What Does Head and Shoulders Chart Pattern Mean?
Example of Head and Shoulders Gold Pattern on a Gold Chart
How to Analyze the Head and Shoulders Chart Pattern
This Head and Shoulders Chart Pattern can also be formed on a slanting neckline, like the head and shoulders trading pattern example above, the neck line does not have to be necessarily horizontal.
