TRADING TIPS

Head and Shoulders Pattern

Hubert Senters here. Let’s take a look at MNST. And it didn’t really matter what we’re looking at. We’re talking about the Head and Shoulders pattern. You have a head and shoulders which is usually a downward breaking pattern and you have a reverse Head and Shoulders pattern. I’m going to walk you through what that looks like. And some platforms are actually scan form and I chart them for you. So I’m doing my best to draw this for you so this is the head. This is the right shoulder. And then that is the left shoulder right there. Okay. And then you see this head right here. This is the neck line or some people draw the neck line here. Anyway, that’s the Head and Shoulders so usually it’s preceded by a drop in price action and then a lot of times you’ll get a reverse Head and Shoulders and then you’re looking for the opposite. So you’re looking for this. You’re looking for ahead here. You’re looking for a shoulder here. And then this one is gone. We have shoulder but it’s to the downside. And you can see its reverse on to the upside so you get a head and shoulders using means it’s going down a reverse head and shoulders means it’s going up. And what you’re looking for in the chart is you’re looking like is right here. There’s a head, there’s a shoulder, there’s a shoulder and then we know that one’s going to break right there on that neckline or below the shoulders and it’s either going to break here like this or here and like that. It’s going to go lower. The reverse is going to be like this shoulder, head, shoulder. And then once it breaks that it’s going to be going into the high side. So be on the lookout for the dreaded head and shoulders pattern and the reversal head and shoulders. Now, there are some patterns that are a little bit more consistent than others. And there are some studies out there and you can do some back test and that’s what good TradeStation programmers and back testers can tell you like ‘’yeah, this works better than that.’’ So don’t just use anything but make sure that you are starting to put together your chart book so that your trading career potentially last a lot longer. Good luck. Hope it helps. See you on the next video. Hubert.

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