fbHead and Shoulders Pattern | Reverse Head and Shoulders | Forex Pattern | IFCM UK
EN

Reverse Head and Shoulders: Forex Chart Pattern

The Head and shoulders graphical price pattern signals the end of trend and the following change in direction of the asset’s price. It is typically formed in a developed uptrend.

Build a shape in the terminal
Once opened Demo you will be supplied with educational materials and online support in your own language

Formation

This pattern is represented by three tops of the market price located at different levels: two lower tops (shoulders) aside and one highest top (head) in between. There is also a neckline (support) connecting pattern’s lows.

Head and Shoulders Pattern
Start earning now in giant market
Trading is mostly about making Right Forecast.
world map

Interpretation of Head and Shoulders

Once the pattern is formed and the price falls below the neckline or support level (plus a certain deviation is possible), investors get a sell signal. The expectation is that the decline will continue, although prices may rebound to the neckline, considered now a resistance, but generally stop around it.

Target price

Following head and shoulders pattern formation the price is generally believed to drop at least to its target level, calculated as follows:

T = N – (H – N),
		Where:
		

T – target level;

N – neckline level (initial support);

H – pattern’s head level (highest top).


Test your knowledge before trading

12 simple questions to help you decide
which account to choose

You can see the graphical object on the price chart by downloading one of the trading terminals offered by IFC Markets.

Was this article helpful?
LikeNo
Visit Educational Center You can study CFD trading more thoroughly and see CFD trading examples in the section How To Trade CFDs Visit Educational Center
You can trade CFD for free, by downloading our CFD Trading Platform NetTradeX. Download