Head and Shoulders Strategy Best Strategy for Beginners in Forex, there are lots of pattern in Forex that we can use to make strategies and analysis and they are so useful we must know how to draw them and where to draw them and they are so helpful they can help us to win many pips in a trade.
Head and Shoulders Strategy
Like other patters head and shoulder pattern is so useful it is having a left shoulder, a head and a right shoulder we can draw on both bullish and bearish.
Head and Shoulders Pattern Forex, It has a peak and that is its shoulder, a higher peak which is its Head and a lower peak that is its other shoulder.
When it is on uptrend it is head and shoulders pattern and when it is downtrend it is inverse head and shoulders.
And it has a Neckline that connects the Shoulders with the Head.
Now let us define it very well
- At first, we must know if it is an uptrend or downtrend. If it is an uptrend the price will go high at a point and drop.
- Second, the price will fall from high too low to make the left shoulder.
- Till a point the price will move up again to make the head.
- After completing the head price once again will fall to a point.
- And after touching the point where the left shoulder made its pullback, the price will go up for the right shoulder.
- After reaching the point the price will fall and complete the head and shoulders pattern.
- Now if we combine all the points which we got from the end of the left shoulder, the head, and the right shoulder we will get a line and that will be our neckline.
How to trade with Head and Shoulder pattern Forex
As you have understood the head and shoulder pattern it is very important to understand how to trade with this pattern in forex.
There are two ways that you can trade with head and shoulders pattern
1.When the price completes the left shoulder and the head you can trade on the right shoulder.
And then the price goes high to complete the right shoulder and comes down to complete the right shoulder you can take both trades.
When the price crosses the neckline you can take trade until the price comes for a pullback and touches the neckline again.
2. After the price touching the neckline it will come down and there the real trade and pips start.
You will place your trade, your stop loss will be the half of the right shoulder.
Your profit will be the size of the head if the length of the head is 200 pips your target will 200 pips.
If the length of the head is 500 your profit target will be 500 pips from neckline to down.
If you make a good analysis and follow the rules you can trade very well with Head and Shoulders Pattern Forex.
Head and shoulders is one of the most used and helpful trading pattern. visit our page for more knowledge about Forex, Techzeer