Head & shoulder top reversal pattern, technical way of trading

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Head and shoulder pattern is a reversal pattern often identified towards the end of an uptrend.

Appearance of this pattern strongly indicates the ending of recent uptrend, and traders should be looking for the opportunities to make shorts.

Identifying Head & shoulder pattern

This pattern consists of three successive peaks, highest middle peak is called as head and other two smaller peaks are called right & left shoulders respectively.  The height of two peaks should be almost same.

The factors to confirm Head & shoulder Pattern Defined uptrend should be there Left shoulder must be above trend line Out of three peaks head portion must be the highest Neck line – Neck line/support line is drawn connecting lowest points of peaks. Trade signal- break down of neck line Trade target – the difference between neck line & high of head portion.

Check the charts ,  explained with Ambuja cements charts.

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