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