GBPUSD Head and Shoulders

7 Mei 2020

What is a "Head and Shoulders"? The head and shoulders model is a figure in the technical analysis that looks like a baseline with three peaks, the outer two are close in height and the middle is the highest.

In the technical analysis, the model describes a specific formation that predicts the reversal of the trend from bullish to bearish.

The head and shoulders model is considered to be one of the most reliable models for reversing the trend.

This is one of the few models that signals that the upward trend is nearing its end.

Requirements for validity:
1.The market must be in an uptrend;

2.The formation has 3 peaks, the outside two are approximately equal, and the middle is higher than them. There are two bottoms between the peaks, which should be equal. Or the second bottom must be higher than the first;

3. The uptrend before the formation should be at least the size of the head in order to have anything to reverse.

The trade:
It is always better to wait for the test of the neckline, especially for beginners!
In general , the stop is placed over the right shoulder.
Take Profit = Head height - 10% for cover!

Avoid Common mistakes:
1.There is no H&S within a downtrend! Remember that!
2. Better skip the trade when the second bottom is lower than first one!
3. Wait for break and test of the neckline.

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