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Invertedheadandshoulders

How to Plot Head & Shoulders Pattern on TradingViewWelcome back, Traders! We’re excited to have you here on TradingView where we share valuable trading insights and educational posts to help you succeed in the markets. Today, we’re diving into one of the most reliable chart patterns in technical analysis: the Head and Shoulders pattern. Understanding and identifying this pattern can significantly improve your trading strategy, whether you’re dealing with forex, stocks, or commodities. What is the Head and Shoulders Pattern? The Head and Shoulders pattern is a bearish reversal pattern that indicates a potential end to an uptrend and the beginning of a downtrend. It consists of three peaks: Left Shoulder: The first peak followed by a decline. Head: The highest peak followed by a decline. Right Shoulder: A peak similar in height to the left shoulder, followed by a decline. The neckline is the support line that connects the lows after the left shoulder and the head. How to Trade the Head and Shoulders Pattern: Identify the Pattern: Look for the three distinct peaks with the head being the highest. Draw the Neckline: Connect the lows after the left shoulder and the head to form the neckline. Entry Point: Enter a short position when the price breaks below the neckline. Target: Measure the distance from the head to the neckline and subtract this distance from the breakout point to set your target. Stop Loss: Place a stop loss above the right shoulder to manage your risk. Inverse Head and Shoulders Pattern Conversely, the Inverse Head and Shoulders is a bullish reversal pattern signaling the end of a downtrend and the start of an uptrend. It consists of three troughs: Left Shoulder: The first trough followed by a rise. Head: The lowest trough followed by a rise. Right Shoulder: A trough similar in depth to the left shoulder, followed by a rise. The neckline is the resistance line connecting the highs after the left shoulder and the head. How to Trade the Inverse Head and Shoulders Pattern: Identify the Pattern: Look for the three distinct troughs with the head being the lowest. Draw the Neckline: Connect the highs after the left shoulder and the head to form the neckline. Entry Point: Enter a long position when the price breaks above the neckline. Target: Measure the distance from the head to the neckline and add this distance to the breakout point to set your target. Stop Loss: Place a stop loss below the right shoulder to manage your risk. Follow us on TradingView for more helpful ideas and educational posts! Stay tuned as we continue to share insights that will help you on your trading journey. Happy trading! - BK Trading Academy
Education
by BKTradingAcademy
7
Inverted Head and Shoulders: A Comprehensive GuideThe Inverted Head and Shoulders pattern is a popular and reliable reversal pattern that signals a potential shift from a downtrend to an uptrend. Understanding and identifying this pattern can provide traders with profitable trading opportunities. Anatomy of the Inverted Head and Shoulders Pattern. Left Shoulder: The price declines to a trough and subsequently rises. Head: The price falls again, forming a lower trough. Right Shoulder : The price rises once more before declining to a trough similar to the left shoulder. Identifying the Pattern To accurately identify an Inverted Head and Shoulders pattern, look for the following characteristics: Three Troughs: The head should be the lowest point, with the two shoulders on either side. Neckline: Draw a trendline connecting the peaks of the two shoulders. This line acts as a resistance level. Breakout Confirmation The pattern is confirmed once the price breaks above the neckline with increased volume. This breakout indicates a reversal of the previous downtrend and the start of a new uptrend. Trading the Inverted Head and Shoulders Entry Point Enter a long position when the price closes above the neckline. To reduce false breakouts, consider waiting for a retest of the neckline as support. Stop-Loss Place the stop-loss order below the right shoulder to limit potential losses. This level provides a cushion against false breakouts and unexpected market movements. Target Price The target price can be estimated by measuring the distance from the head to the neckline and projecting this distance upward from the breakout point. Example: Example Reference image of chart ONGC on Daily Time Frame shared below Distance from Head to Neckline: 62 points Breakout Point: 280 points Target Price: 342 points Practical Example of ONGC chart The neckline is drawn connecting the two peaks at 280 level. A breakout occurs at 280 level with increased volume and now candle closed bullish at 288 levels with Good intensity of Volumes. Key Points to Remember Volume: Volume should increase during the formation of the pattern, especially at the breakout point. Timeframe: The pattern can form over various timeframes, but it is more reliable over longer periods. Market Context: Always consider the broader market context and other technical indicators to confirm the pattern. Conclusion The Inverted Head and Shoulders pattern is a powerful tool for traders looking to capitalize on trend reversals. By understanding its structure and applying disciplined trading strategies, traders can enhance their ability to identify and profit from these patterns. I am not Sebi registered analyst. My studies are for educational purpose only. Please Consult your financial advisor before trading or investing. I am not responsible for any kinds of your profits and your losses. Most investors treat trading as a hobby because they have a full-time job doing something else. However, If you treat trading like a business, it will pay you like a business. If you treat like a hobby, hobbies don't pay, they cost you...! Hope this post is helpful to community Happy Trading! RK💕 Disclaimer and Risk Warning. The analysis and discussion provided on in.tradingview.com is intended for educational purposes only and should not be relied upon for trading decisions. RK_Charts is not an investment adviser and the information provided here should not be taken as professional investment advice. Before buying or selling any investments, securities, or precious metals, it is recommended that you conduct your own due diligence. RK_Charts does not share in your profits and will not take responsibility for any losses you may incur. So Please Consult your financial advisor before trading or investing.
NSE:ONGCEducation
by RK_Chaarts
2
Learn to identify some useful Chart patterns, Merry Christmas🎄 Unlocking the Secrets of Chart Patterns: Navigating Market Trends 📈 Season's Greetings to all our readers! As we celebrate the spirit of the holidays, let's delve into the fascinating world of financial markets. In our journey to understand and navigate the complexities of trading and investing, we've touched upon essential chart patterns that can serve as invaluable guides for market enthusiasts. In the midst of the festive cheer, let's revisit some of these powerful indicators: the Double Bottom, Flag and Pole, Bullish Pennant, Rising Wedge, Falling Wedge, Triple Top, and Inverted Head and Shoulders. Understanding these patterns can be akin to unwrapping gifts of insight into potential market movements. So, grab a cup of cocoa, settle into your favorite chair, and join us as we explore the significance of these chart patterns and share practical tips on incorporating stop-loss strategies to enhance your trading toolkit. Wishing you a Merry Christmas filled with joy, warmth, and prosperous insights in the financial markets! 🎅🎁🚀 Double Bottom: Description: Imagine a smiley face turned upside down. A double bottom is a chart pattern that looks like two rounded troughs (bottoms) next to each other. Interpretation: Indicates a possible reversal of a downtrend. The price has tried to go down twice but failed, suggesting a potential upward movement. Stop-Loss Tip: One can place a stop-loss slightly below the lowest point of the double bottom. If the price falls below this level, it may invalidate the pattern. Flag and Pole: Description: Think of a flag on a flagpole. The "pole" is a strong, quick price movement, and the "flag" is a rectangular-shaped consolidation pattern. Interpretation: The flag and pole pattern often signals a continuation of the previous trend. The flag represents a brief pause before the price resumes its original direction. Stop-Loss Tip: One should set a stop-loss just below the lower end of the flag. If the price drops below this level, it might suggest a reversal of the trend. Bullish Pennant: Description: Similar to the flag and pole but with a small symmetrical triangle (pennant) instead of a rectangle. Interpretation: Indicates a temporary consolidation after a strong upward movement. It suggests that the bullish trend might continue after the brief pause. Stop-Loss Tip: Place a stop-loss under the lower trendline of the pennant. A break below this line could signal a potential trend reversal. Rising Wedge: Description: Picture a triangle with its top side steeper than the bottom side. The price makes higher highs and higher lows but in a narrowing range, with indicator making Lower Highs (Bearish Divergences). Interpretation: This pattern can indicate a potential reversal to the downside. It suggests that the buying interest is weakening, and the price may soon decline. Stop-Loss Tip: Place a stop-loss just above the last price swing high of the wedge. If the price drops below this line, it may suggest a potential reversal. Falling Wedge: Description: Similar to the rising wedge but inverted. The top side is less steep than the bottom side. Interpretation: Represents a potential reversal to the upside. It suggests that selling pressure is weakening, and the price may be ready to move higher. Stop-Loss Tip: Place a stop-loss just below the last price swing low of the wedge. If the price drops below this line, it may suggest a potential reversal. Triple Top: Description: Visualize a horizontal line touching the tops of three consecutive peaks. Interpretation : Indicates a possible reversal of an uptrend. The price has failed to break above a certain level three times, suggesting a potential downturn. Stop-Loss Tip: One should set a stop-loss slightly above the highest point of the triple top. If the price rises above this level, it may negate the pattern. Inverted Head and Shoulders: Description: Picture three troughs, where the middle one (head) is lower than the two on either side (shoulders). Interpretation: This pattern suggests a potential reversal from a downtrend to an uptrend. It signifies a shift in momentum from bearish to bullish. Stop-Loss Tip: One should place a stop-loss just below the neckline (the line connecting the highs of the pattern). If the price falls below this line, it might indicate a failed reversal. I am not Sebi registered analyst. My studies are for educational purpose only. Please Consult your financial advisor before trading or investing. I am not responsible for any kinds of your profits and your losses. Most investors treat trading as a hobby because they have a full-time job doing something else. However, If you treat trading like a business, it will pay you like a business. If you treat like a hobby, hobbies don't pay, they cost you...! Hope this post is helpful to community Thanks RK💕 Disclaimer and Risk Warning. The analysis and discussion provided on in.tradingview.com is intended for educational purposes only and should not be relied upon for trading decisions. RK_Charts is not an investment adviser and the information provided here should not be taken as professional investment advice. Before buying or selling any investments, securities, or precious metals, it is recommended that you conduct your own due diligence. RK_Charts does not share in your profits and will not take responsibility for any losses you may incur. So Please Consult your financial advisor before trading or investing.
NSE:NIFTYEducation
by RK_Chaarts
49
Inverted Head and Shoulders Pattern: A Comprehensive GuideThe inverted head and shoulders pattern is a popular and reliable technical chart pattern used by intermediate and advanced traders to identify potential reversals in market trends. This guide will provide a step-by-step approach to trading this pattern, covering key concepts and actionable strategies. Understanding the Inverted Head and Shoulders Pattern The inverted head and shoulders pattern is a bullish reversal pattern that occurs at the end of a downtrend. It consists of three troughs, with the middle trough (head) being the lowest and the two adjacent troughs (shoulders) being higher but roughly equal in depth. The pattern is completed when the price breaks above the neckline, a resistance level connecting the two peaks formed between the troughs. Identifying the Pattern To identify the inverted head and shoulders pattern, follow these steps: a. Volume Analysis - Look for decreasing volume during the formation of the left shoulder and the head - Volume should increase during the formation of the right shoulder - Expect a significant increase in volume during the breakout above the neckline b. Trendlines and Support Levels - Draw a trendline connecting the peaks between the left and right shoulders to define the neckline - Establish support levels by identifying previous swing lows and areas of price congestion Key Rules for Trading the Pattern - The pattern is only valid when it forms at the end of a downtrend - The pattern should be symmetrical, with the shoulders roughly equal in depth - Wait for a breakout above the neckline before entering a trade - The neckline should act as support after the breakout Entry Strategies Choose between a conservative or aggressive approach based on your risk tolerance: a. Conservative Approach - Enter the trade after a confirmed breakout above the neckline - Wait for a retest of the neckline as support before entering b. Aggressive Approach - Enter the trade before the breakout, as the right shoulder is forming - Use additional technical indicators, such as RSI or MACD, to support your entry decision Setting Stop Loss and Take Profit Levels - Set your stop loss below the right shoulder or the head, depending on your risk tolerance - Determine your take profit level by measuring the distance from the head to the neckline and projecting that distance upwards from the breakout point Common Pitfalls and How to Avoid Them - Entering the trade too early, before the pattern is fully formed - Failing to wait for a breakout confirmation above the neckline - Ignoring volume analysis, which can provide important clues about the pattern's strength Real-Life Examples and Case Studies - Study real-life examples of inverted head and shoulders patterns such as the one attached to this idea or others I have posted previously to reinforce your understanding and develop your pattern recognition skills. - Analyze different market conditions and timeframes to gain insight into how the pattern performs under various circumstances. The inverted head and shoulders pattern is a powerful tool for identifying potential market reversals at troughs. By understanding the pattern's structure, following the key trading rules, and adopting appropriate entry strategies, intermediate and advanced traders can capitalize on this reliable chart pattern.
Education
by bitdoctor
📚Learn More💰Earn More - Inverted Head and Shoulders in USDJPY📚 LEARN MORE 💰 EARN MORE With ForecastCity Inverted Head and Shoulders Definition: A head and shoulders pattern is also a trend reversal formation. It is formed by a Valley (left shoulder), followed by a Lower Valley (head), and then another Higher Valley (right shoulder). A “ Neckline ” is drawn by connecting the highest points of the two Peaks. Neckline resistance does not need to be strictly horizontal. This illustrates that the downward trend is coming to an end . When a Head and Shoulders formation is seen in a downtrend, it signifies a major reversal . The pattern is confirmed once the price breaches the neckline resistance . In this example, we can easily see the head and shoulders pattern. How to Trade the Head and Shoulders Pattern : ENTRY: we put an entry order above the neckline. TARGET: We can also calculate a target by measuring the lowest point of the head to the neckline. This distance is approximately how far the price will move after it breaks the neckline. ❤️ If you find this helpful and want more FREE forecasts in TradingView . . . . . Please show your support back, . . . . . . . . Hit the 👍 LIKE button, . . . . . . . . . . Drop some feedback below in the comment! ❤️ Your Support is very much 🙏 appreciated! ❤️ 💎 Want us to help you become a better Forex trader ? Now, It's your turn ! Be sure to leave a comment let us know how you see this opportunity and forecast. Trade well, ❤️ ForecastCity English Support Team ❤️
Education
by ForecastCity
Impressive reversal pattern on the daily with the dollar.Inverted H&S Break Even Failure Rate 11% Average Rise: 45% Throwback Rate 65% Percentage of Price meeting price target 71% Trend: Downward leading to pattern Price: Must have something to reverse, so if the decline leading to the pattern is small, expect a small rise. Volume: Highest on left shoulder or head “A short-term drop (0-3 months) leading to the pattern results in the best postbreakout performance. “ "A higher left shoulder valley when compared to the right shoulder valley results in worse post breakout performance." - so one could assume the inverse is true? a lower left would result in Better breakout performance?? Breaking right to R3, and not passing on first go is not unusual. With a potential bottoming pattern - right now I'd say the trend for the dollar is to hard to call frankly any trade on. I'm leaning bullish on the dollar, which sounds insane, and does not bode well for commodities - but this pattern on the daily is indicative of a reversal in the dollar. The dollar folks may be getting higher here despite "brrr". Keep in mind how poor the velocity of M2 supply is right now. And keep in mind the Fed giving guidance that rates will be low for years is hinged to their confidence that essentially inflation is really not coming, certainly not hyper inflation or anything high. Very interesting to see if the dollar has found a bottom here. Not advising any trade right now.
TVC:DXYEducation
by ZenMode
7
AUDUSD Inverted Head N ShouldersFor those that may have issues identifying inverted head n shoulders. You can use the higher time frames to see if the picture is clearer. The lower time frames can give you a lot and make a bad trade setup especially if you are not with the trend or not near significant price. By that I mean if you are not at resistance or support, if you find yourself in the middle of nowhere let price touch that area first then reactive after. You could have enter at the right shoulder at the opening of New York session, fortunately this trade had no drawdown but you could have given your self a 15 pip stop loss. This overall trade hit TP for 55 pips it took about a day because AU is a slow moving pair.
Education
by pliger4
BTCUSD H4/D1 charts (2/15/2019)Good morning, traders. Price is attempting to push its way through the descending wedge's resistance as H4 RSI is pushing through its own resistance. H4 MACD is curled up and nearing a bullish cross above centerline. As we can see, the green target, which is based on the height of the wedge, is near the previous swing high. Traders need to be cautious as price nears that area. A close above that swing high is what is needed. A wick above but close below prints a bearish SFP which will likely have price reversing. However, a close above that swing high opens up the targets I discussed yesterday as price begins closing above the pattern resistances. While anything is possible at all times, there is little-to-no reason to think price is ultimately headed down from here at this time. At the very least, we should see price move up toward $3900. A daily close above $3615 should make this much more likely as that gets price back above the daily pivot. I am still not a big fan of the possible IHS but have left it for those of you who are interested in it. BTCUSD Shorts may be finding a temporary bottom at the very least. More importantly, they are nearing the area where they have previously bounced and price headed down as a result. Just because it has happened before does not mean it will continue to happen, though, but it is something to keep an eye on. If Shorts happen to drop below that level this time around it may be an indication that the market is reversing. Every day, we have a choice to act positively or negatively, so if you get a chance, do something decent for someone today which could be as simple as sharing a nice word with them. You just might change their day, or even their life. Remember, you can always click on the "share" button in the lower right hand of the screen, under the chart, and then click on "Make it mine" from the popup menu in order to get a live version of the chart that you can explore on your own.
BITSTAMP:BTCUSDEducation
by Chris_Inks
2
BTCUSD H4/D1 charts (2/14/2019)Good morning, traders. Price continues to consolidate within a flag/descending wedge. The target based on the height of the wedge remains, as it was yesterday, the ascending red "neckline" of the possible IHS. But, as I mentioned previously, we need to see increasing candle spread and expanding volume as the right shoulder is completed and price pushes through the neckline. If we see diminishing volume and/or small candle spread then the possibility of further movement up through the descending channel's resistance is significantly reduced. But we do have a few targets if demand shows itself. The shallowest target of $3730 will get price to the red line and is based on the height of the local wedge, $3970 is based on the height of the flagpole, $4100 is based on the IHS, and $4400 is based on the height of the large descending channel. A breakdown of this wedge has price looking for initial support around $3475-$3510 with secondary support around $3430. Currently, price has retraced almost 50% of the February 8th advance. H4 RSI continues to move within the descending broadening wedge it printed, but appears to be finding a possible floor as it flattens out around 45-50. MACD is also showing growing bullish momentum over the past two days. D1 shows price just below the daily pivot with decreasing volume the past three days and doji candles printing. This suggests that supply may be exhausting itself and, if so, we should see price move upward as demand takes over. Until it happens, however, this is just speculation. Traders should always look for confirmation of direction via pattern completions or breakdowns at the very least. The short green horizontal lines on the D1 chart mark the aforementioned targets. Every day, we have a choice to act positively or negatively, so if you get a chance, do something decent for someone today which could be as simple as sharing a nice word with them. You just might change their day, or even their life. Remember, you can always click on the "share" button in the lower right hand of the screen, under the chart, and then click on "Make it mine" from the popup menu in order to get a live version of the chart that you can explore on your own.
BITSTAMP:BTCUSDEducation
by Chris_Inks
3
How to Trade the Inverted Head and Shoulders PatternHow to Trade the Inverted Head and Shoulders Pattern Hello traders, following up from my educational post on the Head and Shoulders pattern I felt I should provide you with the bullish equivalent... The Inverted Head and Shoulders pattern. Featured on the chart is an illustration of a complete Inverted/Inverse Head and Shoulders pattern including the rules I personally use to trade it. This is an easily identifiable pattern which can be traded across various timeframes which means it can be used by day traders, swing traders or even position traders. Why the Head and Shoulders pattern? It has an excellent risk:reward Appears on all timeframes and markets Easy to remember and find It has a precise entry, stop loss and take profit This formation is mainly seen at market bottoms. It is rarely perfect in appearance and you may need a good eye to spot one (check my inverted head and shoulder trading ideas for an example). You can draw this pattern by using the TradingView tool found on the chart section named "Head & Shoulders" or by using trendlines. From personal experience the best performing Head and Shoulders pattern will have a right shoulder that is a 0.618 retracement of the head. The correct way to trade this pattern is to wait until the entire pattern has formed, then once price closes above the neckline... You can enter your position :) To round off this post I truly hope this explained how to trade the Inverted Head and Shoulders pattern so you can use this for your own trading. I am available via private message for any questions you may have.
Education
by LewisGlasgow
5