Head and Shoulders Pattern on the SPX

4 Apr 2023

An inverted head and shoulders pattern just formed on the daily SPX chart. The standard trade is depicted in this chart, with a stop loss at the right shoulder and a take profit equal to the head's height.
None of my contents is financial advice.
Good trading

10 Apr 2023

Nota

We can enter now to avoid missing the entry, as price action is showing signs of rejection around the neckline price area. RR is of course not as good, it's about a 1:1 wich means we need an estimated probability much higher than 50% to be confident that our trade is a good trade. H&S has a success rate of about 80%, though this probability is esteemed by Thomas Bulkowski in his book The Encyclopedia of chart patterns. As with any subjective method, this probability is not clearly defined with a sistematic backtest, hence the need to go far beyond 50% probability with a 1:1