Strategies7 min read
Head and Shoulders Pattern: Trading the Classic Reversal
The head and shoulders is the most recognised chart pattern. Learn how to trade it correctly. Neckline rules, measured moves and the failed-pattern tell.
The Pattern
Left shoulder (high), head (higher high), right shoulder (lower high). The neckline connects the lows between the shoulders.
Trading It
Enter short when price breaks below the neckline. Target: height of the head below the neckline. Stop: above the right shoulder.
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70-80% of retail investor accounts lose money when trading CFDs. Backtesting does not guarantee future results. Always consider whether you can afford the potential loss of your capital.