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Head and Shoulders Pattern Psychology behind it How to Recognize Confirm and Trade it
>> YOUR LINK HERE: ___ http://youtube.com/watch?v=CczCRJyma4Q
To Open Free Demat Trading account with Fyers Securities, Please click on below link • http://partners.fyers.in/AP0209 • Please fill in your details, Fyers representative will contact you. Be ready to be in Free Investment zone, To Trade with Best Trading platforms, To Trade with Less Brokerages and Finally, To Trade like a Pro. • Hi Viewers Namaste, In analysing any chart pattern, the winning edge which you need to have is, to read the crowd and to understand the order flow of buyers and sellers. You should be able to see the reflections of human behaviour in the chart; You should understand the sentiment that is behind the price movements, by this way you will be more active in that scrip. • In an uptrend, proper uptrend, i.e Every swing is forming higher highs and higher lows, there forms the continuation swing with another set of higher highs, Lets forget about Higher lows for a moment. • Now here starts the actual story. Continuing the uptrend there should be another swing formed with one more higher high right, but due to decrease in buying pressure and rejection of higher prices by sellers the swing forming next will not form a higher high but a lower high compared to previous swing. • Now see combination of these 3 swings is nothing but Head and Shoulders pattern. When this pattern is formed in an uptrend it is treated as Trend reversal pattern. • When this pattern forms at a major resistance level, It adds more confirmations. • This is called First Shoulder, most people call, the Left Shoulder. This is Called head no confusions and this we will call as Right Shoulder.It has given this name As these look like a persons head and shoulders. • So far so good. Now Let’s dig more on the proceedings of this pattern. As you know how to recognize the pattern, by seeing this you will know how to confirm it. Ok,Let’s go back to where we started, the trend is up and going well. • We can confirm the trend one more way by drawing a trend line, in an uptrend the trend line is drawn by connecting the swing lows right. So, this is the trend line which can also be called as diagonal support. • See here, every swing is respecting the line and bouncing back, but here, price pierced the support line and crossed the it in price action terms we can say this as a breakout from a bullish trend line, this is the first case where we get a hint that there is may be a slowdown in the trends intensity. • Ok, the next swing fails to form a new high which it should form if the uptrend is strong, 2nd hint that trend may reverse, in most cases this right shoulder is like price retesting the breakout of the support line, • To get more confirmations. Draw a line connecting the lows of recent two swings, this is a very important component of a Head and Shoulder pattern and is called as Neck line. When the price crosses this line and closes below it, then with these confirmations we can be more confident that the Uptrend has been finished and Trend is reversed. More chances of a downtrend and some chances of a sideways trend follows. • There are three styles of trading this head and shoulders, • Aggressive method – • Conservative Method – A trader draws this neck line and waits for the Price to break below this neckline support area and also waits for a candle to closes below it • Might Miss – These are retracement traders, they are confident that the price will go down but will wait for price to retest this neckline support area which is now the resistance area. • These are explained in the Video. • Its you who need to decide which style you take. For more obvious reasons, until you become a master of analysis we suggest to use the conservative method to trade this pattern. Again, its your money, your way. • Ok, lets see the stop loss and targets of this hns pattern trades. • Once again, the entry is the price when the neck line is broken, • In this pattern the stop loss should few pips above this right shoulder, because if it closes abaove, then it may be a hint that price is continuing its uptrend. • Next Target, • The height of this head tip from the neck line should be taken as the target. In your platform you need to draw a line from head to neck line, copy it and paste it near the neckline, The end of this line will be your target.
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