What is a head & shoulders chart pattern?

The Head & Shoulders is an extremely popular and easy to spot chart pattern used in technical analysis. After you read this guide you will know exactly what to look out for whilst trading. The pattern appears on all times frames and can, therefore, be used by day and swing traders as well as investors.

Where do head and shoulders patterns occur in forex trading?

Head and shoulders patterns occur in all markets, including forex trading , and the pattern is traded in the same way. Below is an example using the major currency pair GBP/USD, with entry, stop loss and profit target opportunities marked using our online trading software.

How important is inverse head and shoulders trading volume?

With an inverse head and shoulders pattern, trading volume is even more significant for validating the pattern trend. You want a considerable volume behind trades if the prices increase to show the possibility and strength of a new potential bull trend.

What is the profit target for the inverse head and Shoulders pattern?

The profit target for the inverse head and shoulders pattern would be: $113.20 (this is the high after the left shoulder) – $101.13 (this is the low of the head) = $12.07 This difference is then added to the breakout price (subtracted in the case of a regular head and shoulders pattern).