TRADING FOREX WITH BULLISH HEAD AND SHOULDER CHART PATTERN

Dear traders, head and shoulder chart pattern formation is very common on candlesticks chart. This post is aimed to explain the ways to trade forex with bullish head and shoulder pattern formation. Bullish head and shoulder pattern is also called bottom head and shoulder, but it can be found anywhere on the forex chart.In a bullish head and shoulder formation there is a left shoulder, a right shoulder, a head and a neckline.

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The shoulders and head carry support levels at the bottom. Neckline is drawn adding the resistance levels by a straight line.The order is generally placed after the right should formation. Breakout of the neckline ensures the uptrend. So logically a buy order with bullish head and shoulder should be placed just above the breakout point.

 

Some smart traders will look for another pattern formation and breakout at the right shoulder such as symmetrical triangle or descending triangle.If the right shoulder has any of these patterns' break out, an order can be safely placed with a profit target till the neckline. Again if the neckline is broken out the order can be remained open to maximize profit.

If an order is placed just at the right shoulder (after any other pattern break out), the stop loss should be placed at the support level at the bottom of the head, but if the order is placed after the break out, the stop loss should be placed at the support level at the bottom of the right shoulder.