Educational Post:
📉 How to anticipate trend reversal using the "Head and Shoulders" pattern?
This pattern is considered a warning bell for traders! Here’s how to take advantage of it:
🔍 Identifying the pattern:
- A high middle peak (head) between two lower peaks (shoulders).
- The neckline is drawn by connecting the swing lows.
🎯 Entry Point (ENTRY):
- Enter a sell trade after confirming the breakdown of the neckline (BREAKDOWN) with an increase in volume.
- Avoid rushing before confirming the breakout!
🛑 Stop Loss (STOPLOSS):
- Place the "stop loss" above the peak of the head or the last shoulder.
- Calculate the trade size so that you do not lose more than 2% of your capital.
💡 🚨Important Warning:
The pattern can also appear inverted ("Inverse Head and Shoulders") indicating a reversal from bearish to bullish!
🚨The pattern is a strong signal for trend reversal, but its success depends on confirming the breakout and risk management.
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