HEAD AND SHOULDERS CHART PATTERN

Head and shoulder Pattern:

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v  Reversal pattern, potential trend changer

v  Why formed? Exhaustion of the existing trend causes it. Failure to take out the top making a right shoulder.

v  Pattern confirmation – Wait for the neck break

v  Target1: Right shoulder to neckline distance

v  Target2: Head to neckline distance.

v  SL: initially use Head point as SL and move to Right shoulder gradually

Patience needed for Hns:

Why need patience? as some Whipsaws come below the neckline and rebound immediately so learn some basic Price Action analysis using Candle sticks (which will look later) to get the price confirmation.

Pattern can be applied on any Timeframe and on any instrument.

Can Hns Fail ?

Why not? As Trader one should expect the worst and the worst case shouldn’t make your capital hunted. So Trade the risk which you can afford. Never overleverage yourself or over risk your capital. Always know the risk involved and be happy to get the SL hit. Never enter a Trade without a SL and exit pre planned.

HnS can fail and we will see some Hns failure patterns too.

Trading is all about how much you win when your right and how much you lose when you’re wrong. Also the Equation should have a positive answer. If not then change your trading style.

Hns pattern Trading need patience and confirmation.

Here are few stocks which could potentially develop a Hns in the future.

1.      Ramco industries

2.      Ratnamani metals and tubes ltd

3.      Camlin fin science

4.      Zen technologies

5.      Shoppers stop

6.      Zydus welliness ltd.,

7.      Ipca laborties ltd

8.      Gujarat fluorochemicals ltd.,

Also wait and get the confirmation before trading. By waiting no capital is lost and preempting a Trade is not advisable in the earlier stages of trading career.

Try switching Time frames and find the potential Hns building up in the above mentioned stocks.

Ramco in weekly

Why pattern completion is important ?

RIL failed to completed the pattern and moved on

BOB completed breakdown

Sun pharma broke hns but neither target nor SL hit

Always remember not always all patterns are equally created.

Note: all patterns are not equally successful.. some may not complete, some will give break but will never reach tgt nor SL, some will rocket to tgt at no time.

Then how to filter which Hns to Trade ? we will see it too soon..