What is Head and Shoulders Chart Patterns?

Trading XAUUSD Identify a Head and Shoulders Pattern in XAUUSD Trading

The Best Trading Patterns Tutorial for Beginner Traders - How to Identify and Trade Head and Shoulders Chart Pattern

Gold Patterns for Day Trading - Gold Patterns Tutorial

This Head and Shoulders trading patterns charts guide explains how to identify xauusd patterns - identifying xauusd patterns is the first step when it comes to learning how to trade with Head and Shoulders chart patterns in Gold.

Head and Shoulders xauusd price patterns commonly form on Gold Trading charts & this chart pattern analysis tutorial explains how to trade & analyze gold charts using Head and Shoulders chart patterns.

Head & Shoulders Chart Pattern

Head & Shoulders Pattern is a reversal trading pattern that forms after an extended Gold Trading upward xauusd trend. Head and Shoulders Chart Pattern is made up of 3 consecutive peaks, the left shoulder, the head and the right shoulder with two moderate troughs between the 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 go short, 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
• This Head & Shoulders Chart Pattern formation indicates that there will be a reversal in the xauusd market
• This Head & Shoulders Pattern formation resembles head with shoulders thus its name.
• To draw the neck-line we use chart point 1 & point 2 as shown below. We also extend this line in both directions.
• We sell when the price breaks out below the neck line point: see the trading chart below for explanation.

Head and Shoulders Pattern

Or the head & shoulders chart pattern can also form on a slanting neck line, like the xauusd trading example illustrated and explained below:

Head and Shoulders Pattern

Example of Head and Shoulders Pattern on a Gold Chart

Head and Shoulders Pattern

This Head and Shoulders Pattern can also be formed on a slanting neckline, like the one above, the neckline does not have to be necessarily horizontal.