Head and shoulder indicator forex factory

Head and shoulder indicator for mt4.

Hey guys iam looking for head and shoulder mt4 indicator . kindly post it if any one has it .

There's one in the Tutorial A-B-C-D thread, page 119:

Thanks for link .

Thanks for the link. But its practically kinda very difficult to find out the patterns and draw it . was just wondering if you have any of the pattern indicator.

5.Double top & Double bottom.

If u can you post or mail me some of the indicators you have then kindly do the needful. My mail id is apurvjain2012gmail.

Thank you for your kind reply .

Head and shoulders you must catch with the eyes not with indicators!

Very late answer perhaps, please have a look at get to grips with MT4- Head and Shoulders may be this would help.

How to Trade the Head and Shoulders Pattern.

Head and Shoulders.

A head and shoulders pattern is also a trend reversal formation.

It is formed by a peak (shoulder), followed by a higher peak (head), and then another lower peak (shoulder).

The slope of this line can either be up or down. Typically, when the slope is down, it produces a more reliable signal.

In this example, we can easily see the head and shoulders pattern.

With this formation, we put an entry order below the neckline.

We can also calculate a target by measuring the high point of the head to the neckline.

This distance is approximately how far the price will move after it breaks the neckline.

You can see that once the price goes below the neckline it makes a move that is at least the size of the distance between the head and the neckline.

We know you’re thinking to yourself, “the price kept moving even after it reached the target.”

And our response is, “ DON’T BE GREEDY! ”

Inverse Head and Shoulders.

The name speaks for itself. It is basically a head and shoulders formation, except this time it’s upside down.

A valley is formed (shoulder), followed by an even lower valley (head), and then another higher valley (shoulder). These formations occur after extended downward movements.

Here you can see that this is just like a head and shoulders pattern, but it’s flipped upside down.

Our target is calculated just like the head and shoulders pattern.

Measure the distance between the head and the neckline, and that is approximately the distance that the price will move after it breaks the neckline.

You can see that the price moved up nicely after it broke the neckline.

If your target is hit, then be happy with your profits.

However, there are trade management techniques where you can lock in some of your profits and still keep your trade open in case the price continues to move your way.

You will learn about those later on in the course.

Your Progress.

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How to Profit From the Head and Shoulders Pattern (And Avoid Common Mistakes)

The head and shoulders pattern is by far my favorite way to trade reversals in the Forex market. They don’t come around often but when they do the profits can be considerable.

It isn’t abnormal to see moves of 500 pips or greater from these patterns. We’ll take a look at one that formed on the GBPJPY that resulted in a very profitable 1,800 pips.

But what actually qualifies as a head and shoulders? Where should it form on a chart and what attributes does it need to have?

Exclusive Bonus: Download the Head and Shoulders PDF Cheat Sheet that will show you everything you need to know to make money from this reversal pattern.

Then there are the questions about entries, exits and of course the often-confusing measured objective. All of these unknowns can lead to an endless stream of confusion.

If you find yourself asking these same questions, then you’re in luck.

By the time you finish this lesson, you will know how to identify the very best reversals and how to enter and exit for a profit. I’ll even show you how to determine a measured objective so you can squeeze out as much profit as possible while managing your risk.

Key Attributes of the Head and Shoulders Pattern.

Before you can trade it, you must first know the key attributes of the pattern. That way you can easily spot the most favorable head and shoulders to trade.

Let’s start with the illustration below.

As you can see from the drawing above, the head and shoulders pattern has five attributes.

In order of occurrence, they are:

Notice that I placed the “neckline” last. At first, that may seem like a mistake.

However, we need both shoulders and the head of the pattern before we can identify the neckline. If that sounds confusing, don’t worry. It will make more sense as you progress through the lesson.

Now let’s discuss each step in greater detail.

Step 1: Uptrend.

The very first part of a head and shoulders pattern is the uptrend. This is the extended move higher that eventually leads to exhaustion.

As a general rule, the longer the uptrend lasts, the more substantial the reversal is likely to be.

Step 2: Left shoulder.

The market moves down to form a higher low. At this point, things are starting to come together, but we don’t quite have enough to draw the neckline.

Step 3: Head.

Now that the left shoulder has formed, the market makes a higher high which forms the head. But despite the bullish rally, buyers are unable to make a substantially higher low.

At this point, we have the left shoulder and the head of the structure. The neckline is also beginning to take shape, but we need the right shoulder before we can draw the neckline on our chart.

Step 4: Right shoulder.

The right shoulder is where things come together. It’s an indication that buyers are tiring and that the market may be gearing up for a reversal.

As soon as the right shoulder begins, we have enough to start plotting the neckline. But because the pattern isn’t yet complete, it’s best to think of it as a rough draft rather than a final version.

Step 5: Neckline.

Now that we have a defined head and two shoulders we can draw neckline support. This level will become a key component when we get into how to trade the breakout.

Think of the neckline as the line in the sand between buyers and sellers.

What Is It and Why Does It Form?

All price action carries with it a message. Some messages are easier to read than others, but they’re always present.

Concerning the head and shoulders pattern, the message is that buyers are tiring and that you’d best prepare for a potential reversal.

But what is it about the pattern that causes the market to reverse? How can a few simple swing highs accomplish this?

These are the kind of questions that will help you unlock the clues and take you to the next level.

The way I phrased the two questions above fails to capture the essence of the head and shoulders pattern.

You see, it isn’t the price structure itself that causes the market to reverse. It’s the transition that occurs between buyers and sellers . The pattern is just the outcome or byproduct of that process.

To better explain things let’s look at it from a different perspective. For this, we’re going to use a real head and shoulders formation that occurred on the GBPJPY weekly chart.

Notice how after carving out a higher high (head) and pulling back, buyers were unable to push the price back above the head. This eventually formed the right shoulder.

The lower high would be a big red flag if you were a GBPJPY bull during this time.

Let’s take another look at the same GBPJPY chart.

If you’ll remember from the lesson on how to determine trend strength, the telltale sign of an impending trend change is a shift in the sequence of highs and lows.

For example, a market that’s been carving out higher highs and higher lows may be in trouble with a single lower high.

However, a trend is not technically broken until we get a lower high and a lower low. Note how the price action inside the second red circle above took out the last swing low.

As soon as that low was taken out, the GBPJPY signaled that buyers were in trouble.

The head and shoulders reversal doesn’t work because of the pattern itself. It works because of the way in which the highs and lows develop and interact with each other at the top of an uptrend.

Always remember to keep it simple. All we’re doing here is identifying a potential shift in trend by focusing on the relationship between highs and lows .

Head and Shoulders Breakout.

One important thing to keep in mind about the head and shoulders pattern is that it’s only confirmed on a break of neckline support.

And by break, I mean a close below it .

A common mistake among Forex traders is to assume the pattern is complete once the right shoulder forms.

In fact, it’s only complete and thus tradeable once the market closes below the neckline .

Notice in the illustration above that the market has closed below the neckline. This confirms the head and shoulders pattern and also signals a breakout.

Pro Tip: If you are on the daily chart, you would want to wait for a daily close below the neckline before considering an entry.

Now let’s go back to our GBPJPY example to see where the pattern was confirmed.

Notice how it took a daily close below neckline support to constitute a confirmed break. While there were a few previous sessions that came close to breaking the level, they never actually closed below support.

Next, we’ll discuss a few entry methods for trading the head and shoulders.

How to Enter a Break of Neckline Support.

So far in this lesson, we have covered the five attributes of a head and shoulders pattern. We have also discussed how to differentiate a formation that’s still intact versus one that has broken down.

Now for the really fun part – how to trade and of course profit from a head and shoulders reversal.

There are two schools of thought on how to enter a breakout. The first is to use a pending order to go short just below the neckline. Note that those who use this method are not waiting for the market to close below the neckline.

The problem with this approach is that you leave yourself exposed to the possibility of a false break. You’ll often see a pair dip below support on an intraday basis only to close back above the level before 5 pm EST.

Which brings us to the second approach, and the one I prefer. This method involves waiting for a daily close below the neckline before considering an entry.

By doing this, you mitigate the risk of having the market snap back on your position and stop you out for a loss.

Because of this, we’re only going to focus on the second approach. But even when waiting for the market to close below the neckline there are two entry methods to consider.

Let’s discuss each in detail.

Entry Method #1.

The first way to enter a head and shoulders break is to sell as soon as the candle closes below support.

For example, because we’re analyzing the GBPJPY on the daily time frame, we’d wait for a daily close below the neckline. That would be our signal to go short (sell).

Here’s how that would look:

Notice how we’re entering short as soon as the pair closes below neckline support.

Entry Method #2.

While the method above has its uses, I usually prefer to wait for a retest of the neckline as new resistance.

This brings us to the second entry method.

Notice how with the second entry method we’re waiting for a retest of the neckline as new resistance.

This accomplishes two things:

This combination is why I almost always opt for the second method. There is, of course, a greater chance of missing an entry by waiting, but the potential reward for doing so is equally great.

Stop Loss Placement and Risk Control.

Despite being straightforward, the stop loss placement when trading the head and shoulders is a controversial topic. Some traders prefer a stop above the right shoulder whereas others choose a more aggressive placement.

Like everything you do in the Forex market, it comes down to what works best for you.

With that said, I tend to believe that a stop loss above the right shoulder is excessive. It unnecessarily and adversely affects your risk to reward ratio.

A head and shoulders is confirmed with a close below the neckline, right? So a close back above that same level would negate the pattern.

Now, assuming my stop is above the right shoulder, am I going to wait for the market to take me out if it closes back above the neckline?

So really there are three ways to exit the trade should things turn sour. Let’s start with the first and, in my opinion, less appealing way and then we’ll finish up with my two favorites.

Stop Loss Placement #1.

The first area you can place your stop loss is above the right shoulder.

Notice how this option provides an ample amount of space between your entry and stop loss.

However, this isn’t necessarily a good thing. I’d even argue that it does more harm than good . You see, a stop loss that high means you’ve also cut your potential profit in half or worse.

In the case of the GBPJPY pattern the measured objective, which we’ll get to next, is 1,800 pips below the breakout point. If you chose this first option to set your risk, it means you’d have a 500 pip stop. If we divide that into the objective, we get 3.6R.

That’s pretty good but let’s see what we could have had using the section option.

Stop Loss Placement #2.

This is my preferred stop loss placement. It allows for a much better risk to reward ratio while still affording me the ability to “hide” my stop.

Here’s how it looks on the GBPJPY chart:

Note that I’m placing the stop above the last swing high. This is still about 200 pips from my entry, so it’s hidden, but it isn’t so far away that it adversely impacts my potential reward.

You can always go tighter if you’d like as it all depends on what fits your trading style. Just remember that the closer your stop loss is to your entry the greater the chance of being taken out of the trade prematurely.

Remember the 3.6R profit with the first stop loss placement above?

By setting your stop above the last swing high instead, you’ve cut your stop loss distance from 500 pips down to 200 pips. With an 1,800 pip objective, that’s an incredibly profitable 9R.

To put it in hypothetical terms, that’s a 7.2% profit versus an 18% profit, assuming you risked 2% of your account balance on the trade.

Exit on Close (Safety Net)

I call this my safety net. Because any daily close back above the neckline suggests invalidation. And I don’t know about you, but I’d rather take a 50 pip loss than a 100 pip loss.

Referring to the GBPJPY example above, if the market had closed back above the neckline after it closed below it, we would want to exit the trade. Such a close would signal that the pattern is no longer valid and that sellers are no longer in control.

In fact, this notion can be applied to just about any pattern you trade. It can help reduce the size of a loss in the event the market turns against you.

Profit Targets and Measured Objectives.

Knowing when to take profit can mean the difference between a winning trade and a losing one . It’s arguably the most challenging aspect of trading.

When it comes to the head and shoulders pattern, there are two ways to approach it. And for some, a blend of the two may be the way to go.

Approach #1.

The first and more conservative approach is to book profit at the first key support level. These are the areas you’ve defined that could cause the market to bounce. As such, it may be a good idea to take profit on a retest of one of these areas.

Because every situation is different, these support levels will vary. But the one thing that must always be true is a favorable risk to reward ratio. So always be sure to do the math before taking the trade.

Approach #2.

The second and more aggressive approach is to use a measured objective.

Although using a measured objective is more aggressive as your target is further away from your entry, it’s also more universal.

Why is that, you ask?

When you use this method, you’re taking a measurement of the height of the entire pattern. So regardless of the situation, you will always have a specific target area.

Here’s one taken from the EURCAD daily chart:

Note that I measure from the top of the head directly below to the neckline. I then take that same distance and measure lower from the breakout point.

Measuring from this point is a small but significant detail, especially for necklines that develop at an angle.

One last note about measured objectives. Although they can be extremely accurate, they are rarely perfect. So as an added layer of defense, it’s best to think of them as general areas rather than specific levels.

Also, try to find a key support level that intersects with or at least comes close to the measured objective. This will help you validate the target area and give you a greater degree of confidence during the trade.

A Few More Examples and Explanations.

Who doesn’t like more examples? I know I do.

So to start wrapping things up, here are a couple more examples of the head and shoulders in action.

Be sure to take note how each structure forms in its own unique way yet is still highly effective at signaling a reversal.

First up is the EURCAD daily chart.

Notice how in this case the measured objective lined up with a key pivot area. While it’s not required, this can add a greater degree of confidence to any trade idea resulting from the reversal.

The second reversal pattern formed on the USDJPY weekly time frame after a multi-year uptrend.

A significant difference here from the first EURCAD reversal is that the USDJPY neckline is a horizontal level. This is perfectly acceptable but isn’t very common.

In most cases, the neckline support will form at a diagonal. The pitch of the level can vary, but one thing must always be true – the level should move from lower left to upper right . Note the angle on the first EURCAD chart above.

Putting It All Together.

Now let’s put everything you just learned together. The video below will walk you through the same EURCAD head and shoulders from start to finish.

A Few Key Insights Before You Go.

So by this point, you’re familiar with the attributes of the pattern, where to find it and most importantly, how to enter and exit for profit.

But there are a few key insights I want to share with you before you go. Think of these as rules to follow when trading the head and shoulders pattern.

Let’s get started.

The pattern must form after an extended move higher.

This rule is self-explanatory. It can only be a bearish reversal pattern if it forms after an extended move higher.

One way to double check is to make sure there are no immediate swing highs to the left of the formation.

Take a look at the charts above. Notice all the white space to the left. That’s what you want to see when trading any bearish reversal pattern.

Neither shoulder can be above the head.

You can’t raise your shoulders above your head, right?

For your sake, I hope not.

The same applies to this technical pattern. The head should always stick out above both the left and right shoulders. And while there’s no exact rule for the distance, it should be evident from a quick glance.

Pro Tip: If you have to question the validity of a pattern, it probably isn’t worth the risk.

The neckline should be horizontal or ascending but never descending.

If you find a head and shoulders where the neckline moves from the top left to the bottom right, you may want to stay on the sidelines.

For example, if you see this:

It’s a sign of a “weak” reversal pattern. And while you may still enjoy a favorable outcome, the odds aren’t in your favor.

Instead, this is what you want to see:

Note how the neckline is moving from lower left to upper right. This suggests a “healthy” head and shoulders pattern and one you probably want to keep an eye on.

In my experience, the steeper the angle of the neckline, the more aggressive the breakout and reversal is likely to be . Look no further than the GBPJPY example above.

The shoulders should be on the same horizontal plan.

This one is a bit tricky to explain, so an illustration seems more appropriate.

Notice how both the left and right shoulder “overlap” to some degree. Each shares a portion of the same horizontal plane. They don’t need to overlap entirely, but they do need to share a portion of the highlighted area above.

If you find a price structure that doesn’t fit this description, it isn’t technically a head and shoulders.

Stick to the daily and weekly time frames.

Last but certainly not least are the time frames that tend to perform the best. After several years of trading these reversals, I can say with certainty that they are most reliable on the daily and weekly time frames.

While you can trade them on say a 1-hour or 4-hour chart, you run the risk of finding a lot of false positives. That is a pattern that looks like a head and shoulders but doesn’t perform like one.

To avoid this be sure to stick to the daily time frame and higher. After all, that’s where you can usually find the most consistent trends.

Final Words.

There are many different ways to trade reversals in the Forex market, but few are as consistently profitable as the head and shoulders.

It isn’t just about trading a technical formation. It’s about “reading” the price action to understand the fundamental shift between buyers and sellers .

While there are no guarantees in the Forex market, the head and shoulders strategy you just learned is as close as it gets. Follow the guidelines above, and you’ll be well on your way to achieving consistent profits.

Now It's Your Turn.

Are you ready to start trading the head and shoulders reversal pattern?

If so, you definitely want to download the free head and shoulders pattern PDF that I just created.

It contains everything you need to know to maximize profits and minimize losses while trading them. That includes how to enter, where to place your stop loss, measured objectives and much more.

Click the link below and enter your to get instant access to the cheat sheet.

This was very helpful and insightful Justin. How much is your mentorship?

This was great. Thanks. dale.

Glad to hear it, Dale. Thanks for the feedback.

Justin, It is very good and practical description what H&S is. Thank you.

You’re welcome. Thanks for stopping by.

I Found This Lesson Helpful.

In Addition To The Points You Mentioned In The Lesson I Also Consider Below Mentioned Points While Trading H & S Pattern.

1. The Left Shoulder Have To Be Above The Up-Trendline.

2. The Volume Traded In The Head Area Should Be Relatively Lower Compared To The Left Shoulder.

3. The Candlestick Which Break The Neckline Should Have Higher Traded Volume.

4. The Bigger The Breakout Candlestick, The Better.

5. Stop Loss Placement #3 Would Be Above The High Of The Breakout Candlestick.

Let Me Hear Your Thoughts.

hi justin another great training thankyou malcolm ps dose it also work on a down trending market.

Malcolm, you’re welcome. Yes, that’s the inverse head and shoulders. I’ll be writing a separate lesson for that.

Thanks for a clear and methodical lesson on H&S. Are there any Head & Shoulder patterns forming now that I can keep track of. Solaron.

Solaron, you’re welcome. Not that I can see.

wonderful, as always. thanks.

Thanks, Mirza. Pleased to hear you enjoyed it.

Great. Very helpfull… Thanks Justin…..

You’re welcome, Mohd. Let me know if I can help.

Thanks that was a helpful lessons.

Andile, pleased to hear that. Let me know if you have any questions.

Very useful content Thank U.

You’re welcome, Preeda. Glad to hear you found it helpful.

Outstanding…I love your work Justin!

Thank you a lot.

You’re welcome, Juan.

I must say I’m really enjoying your material, I’ve just got your pin bar course and already I’ve learnt a few more things i didnt know before. With reading your head and shoulders pattern, i actually wanted to ask your opinion if that is the case in NZD/USD, on the daily time frame?

It appears that it has broken the neckline and currently as of today retesting the neckline, so in fact if it is – this would be an excellent opportunity to short it?

I would really appreciate the feedback as I havent signed up for the membership to have access to you as yet 🙂

Hi Zahra, it did appear to be a head and shoulders, but the pattern was invalidated at the end of last month. Hope that helps.

Thanks that’s great.

Must I wait for my stop loss to be hit or as soon as I identify a close above neck line I can close the trade.

Danilo, you’re welcome. If it’s a daily close back above the neckline you’re probably better off closing the trade. No sense in losing additional capital if the market has invalidated the setup.

Of course, that assumes that the neckline you’ve drawn is accurate.

I love the way you elaborate it. it’s a good article and really helpful.

Glad to hear it, Imran. Cheers.

This article is very informative. Please provide a PDF file of it, like you did with the other patterns. So we can download it and print it out. Thank you in advance Sir.

Mateye, it’s on the to-do list. 😉

Very well explained enjoyed the lesson thanks Justin.

Very good and clear lessons Justin —Thanks.

Pleased to hear that, Rick. You’re welcome.

Easy and understandable even for a Dane. Your videos help keep things connected.

The best greetings,

That’s awesome to hear, Peter. Let me know if you have any questions. Cheers.

Hi Justin. Thank you for the lovely lessons. I would like to know how do you draw the neckline, do you draw it to touch the lows of the candles on the left sholder or the daily close ?

You’re welcome, Lubabalo. I usually draw them from the lows, that way I know I’m not missing anything.

Justing is it necessary that the right shoulder be a lower high to be head and shoulders? I see that the grapH USDJPY the right shoulder is higher than left should but in other graphs that you give as examples is a lower high! can you clarify that!

thanks a lot Alex.

I just love the way you elaborated the head and shoulders patterns, guess what, I just traded one on my market and I went short from right shoulder’s pick and exited at the first support since the neck was a descending one. I’m just waiting for daily close then enter again.

Thank you. Its very useful.

I have been going through your lessons all weekend and have found them to be more informative than anything I have learnt in the last few months that I have been learning forex. Thank you so much.

thanks for this clear explanations on HEAD AND SHOULDER PATTERN.

Actually I am new to your community. I have been trading currencies not quite long , I never liked.

strategy because of the way other out there explains it , it looks so confusing to me, so i do not look at it all, but with the way you explained it , it is so clear and understandable to me now.

Please if a level is broken, is it a must for price to retest that level before continuing in its direction?

Nice teaching God bless you.

Thanks the session made it clear on the neckline and entry positions. I took the trade I made money then re-entered after the non-farm results I lost all I made .

Sorry to hear that caleb. Sometimes after a win. I don’t trade till next day it gives me time to calm down and asses the charts. Try it and see.

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Head And Shoulders Pattern (7 THINGS YOU NEED TO KNOW)

Ever wondered what the head and shoulders pattern is and how to trade it? Well, in here, I will try my best to explain what it is, how you can spot it and how to trade it.

Don’t forget to share, tweet, like or mention this to your fans and friends at the end of this post.

Table Of Contents.

WHAT IS THE HEAD AND SHOULDERS PATTERN? DEFINITION AND EXAMPLES.

What is the head and shoulders pattern? Well, this is the definition of a head and shoulder pattern: it is simply a bearish chart pattern that has a head and shoulders on both sides of the head…just like a human. Well, in this case, not exactly right but that’s the idea anyway.

Ok, that is In this post, you will have answers to questions such as these:

Is the head and shoulders pattern a bullish or bearish pattern? is the head and sholders pattern a continuation pattern? What does the head and shoulder pattern look like? How do you trade the head and shoulder pattern? Are there any head and shoulder pattern MT4 indicators out there?

This chart below shows what a head and shoulders pattern looks like in an ideal case:

But in reality, there are some “noise” and you really have to eliminate the noise to really identify the head and shoulders chart pattern when it is forming.

The following few charts show what a head and shoulders pattern looks like:

#1: IS THE HEAD HEAD AND SHOULDERS PATTERN A CONTINUATION PATTERN?

No. The head and shoulders pattern is not a continuation pattern but a bearish reversal chart pattern.

So you should be looking for a head and shoulders pattern in an uptrend.

Now, lets get down deeper to understand how the head and shoulders chart pattern forms.

For a head and shoulders chart pattern to form, the following 4 things must happen in order:

Market is in an uptrend. Price rises and forms a peak or top then falls. This first peak price forms is the left shoulder. Then price rices and goes past the first peak, makes a second peak and then falls again. This 2nd peak is called the head. The head is always higher than the left shoulder. then price rises for the third time but does not go past the second peak (the head) and falls again. This third peak is called the right shoulder. The right shoulders also must not be higher than the head. The head must always be taller than both shoulders.

#2: 3 REASONS WHY THE NECKLINE OF THE HEAD AND SHOULDERS PATTERN IS IMPORTANT.

The neckline is an important part of the head and shoulders pattern? Do you know the reasons why? Well, I will tell you:

Because this forms the support level for price. The breakout of the neckline is your full confirmation that this is a head and shoulders chart pattern happening. the neckline and the head of the pattern are used to calculate the profit target. I will show you how, below.

#3: HOW TO TRADE THE HEAD AND SHOULDERS CHART PATTERN.

Here are some important points you need to know:

A head and shoulders pattern is not complete if the right shoulder is not yet clearly formed the only time you can say confidently that “this is head and shoulders pattern” is when the right shoulder is formed and price is heading down and touching the neckline. That’s when you start getting prepared to trade the head and shoulders chart pattern because now you are anticipating a breakout of the neckline.

So how do you actually trade the head and shoulders chart pattern?

The basic/main way to trade the head and shoulders chart pattern is to wait for a breakout of the neckline. This happens when you see a bearish candlestick closing below the neckline. This is your sell signal. So as soon as that neckline breakout candlestick is confirmed, on the formation of the next candle, you can either sell at market order or place a pending sell stop order a few pips below the low of that bearish breakout candlestick. Your can place your stop loss a few pips above the high of the breakout candlestick.

#4: HOW TO CALCULATE THE PROFIT TARGET OF A HEAD AND SHOULDERS CHART PATTERN.

What you see and read in many trading sites say that you have to measure the distance in pips between the head and the neckline and whatever that number is, that will be your target profit in pips.

So once you get that number, subtract that pips from your entry price and that will give you your price level to set your take profit target at on your sell order.

The chart below helps to make this clear:

Notice on the chart above the 2 blue lines? The top line is the pip distance between the head and the neckline and that distance is used to calculate the profit target as seen on the second blue line below.

#5: WHAT TIMEFRAMES CAN THE HEAD AND SHOULDERS CHART PATTERN FORM?

You can find the head and shoulders chart pattern in all timeframes. But here’s a fact, the larger timeframes bring in more profits than trading from smaller timeframes and also the head and shoulder patterns found there are much more reliable (in my humble opinion).

But again, its really up to you what timeframe you want to trade.

#6: ANY HEAD AND SHOULDERS PATTERN FOREX TRADING STRATEGIES?

Are there any forex trading strategies on forextradingstrategies4u that are built around the concept of head and shoulders pattern?

You bet! Here they are:

#7: ANY HEAD AND SHOULDERS PATTERN MT4 INDICATORS?

I haven’t seen a reliable head and shoulders MT4 indicator yet. If you know of one, I’d be really happy if you can leave a comment below and point me in the right direction so I can get my hands on it as well and post it here so many forex traders can enjoy.

the head and shoulders pattern is a bearish reversal chart pattern and not a continuation pattern. it is a reliable bearish pattern that can bring hundreds of pips when you trade it using larger timeframes. you only look for this pattern when the market is in an uptrend. the head and shoulder pattern is confirmed when the neckline is formed. the head and shoulders pattern can form in any timeframe.

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2 Responses.

Good on you, Isabelle.

your blog is a treasure trove. currently im reading this and trading a head and shoulders pattern forming. it’s a good thing too because it really shows the breaking out of the pattern. almost didn’t made it out alive.