Reversal Chart Patterns: Head and Shoulders & Reverse Head Shoulders
Head and shoulders Gold Chart Pattern
This is a reversal chart pattern which forms after an extended XAUUSD upward trend. It's made up of three consecutive peaks, the left shoulder, head & the right shoulder with two moderate troughs between the shoulders.
This xauusd pattern is considered complete once gold price penetrates and moves below the neckline, which is drawn by joining the two troughs between the shoulders pattern.
To go short, XAUUSD traders place their sell stop orders just below neck line.
Summary:
- This XAUUSD Trading pattern forms after an extended move upward
- This formation indicates that there will be a reversal in gold trading market
- This formation resembles head with shoulders thus its name.
- To draw the neckline we use chart point 1 and point 2 as displayed below. We also extend this line in both directions.
- We sell when price breaks-out below neck line point: see the chart below for explanation.
Or the head & shoulders can also form on a slanting neckline, like the xauusd example shown below:
Examples of Head & Shoulders Pattern on a XAUUSD Chart
Head & Shoulders Pattern
This xauusd pattern can also be formed on a slanting neckline, like the one above, the neck line does not have to be necessarily horizontal.
Reverse Head & Shoulders Chart Pattern
This is a reversal head and shoulders pattern which forms after an extended XAUUSD Trading downwards trend. It resembles an upside-down head shoulders.
This xauusd pattern is considered complete once gold price penetrates above neck-line, which is plotted by joining these 2 peaks between the reverse shoulders pattern.
To go long buyers place their buy stop gold trade orders just above neck line.
Summary:
- This XAUUSD Trading pattern forms after an extended move downward
- This formation indicates that there will be a reversal in gold trading market
- This formation resembles upside down, thus the name Reverse.
- We buy when price breaks-out above the neck line point: see the chart below for explanation.
Examples of Reverse Head & Shoulders Pattern on a XAUUSD Chart
Example of Reverse Head & Shoulders Pattern
