Head and Shoulders top

Visual Representation
Your head and Shoulders Top Chart Pattern consists of a left shoulder, a head, along with a right shoulder. The Neckline may be the line that is connecting the two lows of the formation otherwise known as valleys. The neckline is often times formed as a double bottom, but the price-levels of the two lows can be different. We would call this an up-sloping or down-sloping neckline. Head and Shoulders Top Chart Pattern

Psychological Movements
The left shoulder is made after an extensive turn to the upside. Bears then push the price down forming the first valley. The Bulls control again, reaching a better high in the market, forming the top. The Bears stay away from the move and push the price down to form the second valley. The best shoulder is shaped when price moves up again but remains under the high of the head. In the last move costs are pushed down rich in pressure of the Bears last but not least breaks the neckline for the downside.

Trade Management
We enter a trade, after the Head and Shoulders Top Pattern has completed and value closes below the neckline. The stop-loss rests above the right shoulder. The gain target for the pattern equals the change from the head to the neckline. Head and Shoulders

One Note
Within our Trading the up-sloping Head and Shoulders Top Chart Pattern outperforms the double bottom or down sloping Head and Shoulders Chart Pattern.