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HomeShare MarketHead And Shoulders Pattern Rules || Inverse Head And Shoulders Pattern Rules- Dehati Trader

Head And Shoulders Pattern Rules || Inverse Head And Shoulders Pattern Rules- Dehati Trader

byPrabhat Kumar Sharma0 -December 25, 2020

Introduction

In a previous post and series we learn about the Trend Line: Basic To Advance Prize Action, Basic To Advance Support And Resistance, and also the Fibonacci Retracement. If you did not learn that post before reading this post you must be read that post for masters in prize action.

List Of  Content
1. Major Reversal Patterns
2. The Head And Shoulders Pattern Rules
3. The Head And Shoulder Reversal Patterns
4. When I sell in head and shoulders reversal pattern?
5. Head And Shoulders Pattern Time Frame
6. Head And Shoulders Pattern Stop Loss
7. Head And Shoulders Pattern Target
8. The Inverse Head And Shoulders Pattern Rules
9. The Inverse Head And Shoulder Reversal Patterns
10. When should I buy in inverse head and shoulders reversal pattern?
11. Inverse Head And Shoulders Pattern Time Frame
12. Inverse Head And Shoulders Pattern Stop Loss
13. Inverse Head And Shoulders Pattern Target
14. Why Sometimes Head And Shoulders Pattern Failure
15. There are some common questions related to head and shoulders patterns asked by people-
16. There are some common questions related to inverse head and shoulders patterns asked by people-

Major Reversal Patterns

Now, we talk about the Major Reversal Patterns. If you read the previous article you know that about the prize chart and trend line reversal. When the price is moving in a particular trend with making patterns and then it giving breakout/breakdown of that pattern this is the reversal of trend as like trend line reversal breakout/breakdown.

As, you know that the prize is moving with making the patterns so, we talk about the 
Types of Patterns: The prize is moving with making the two types of pattern 1. Reversal Patterns 2. Continuation Patterns

1. Reversal Patterns 
In these prize patterns the prize reverse the trend as like any stocks are continue moving in an uptrend but the trend line is broken and taken resistance in an uptrend and taken support in a downtrend and the trend shifted to the downtrend that is a reversal of a trend.

2. Continuation Patterns 
In these prize patterns, the prize continues the trend as like any stocks are moving in uptrend and again taken support on trend line and continue to the uptrend and the stocks are moving in a downtrend and again taken resistance on trend line and continue to the downtrend that is continuation patterns.

Now, we talk about the Types of Reversal Patterns

Read Also: Basic To Advance Support, Resistance And Fibonacci Retracements

The Head And Shoulders Pattern Rules

The head and shoulders patterns strategy are the most profitable at any time only we should remember some important point at the execution of the head and shoulders pattern rules. These rules are very common to all Reversal Patterns that is 

Rule.1: Always remember that at the time of pattern breakout the Volume must be greater than the previous some candle.

Rule.2:  Always take the trade at the breaking of the important trend lines.

Rule.3: Always remember that larger patterns are more powerful than smaller patterns.

Rule.4: The Top is more volatile than the Bottom


The Head And Shoulder Reversal Patterns

The Head And Shoulders Pattern is always formed in the uptrend and it's reverse the trend in a downtrend. If I compare all the reversal patterns the head and shoulders pattern is a more reliable pattern. This is the king of the major reversal patterns. 

To understand the head and shoulders reversal pattern you must know about Trend Line: Basic To Advance Prize Action(How To Use Trend Line). If you read before, you know that the uptrend trend reverses into a downtrend when the uptrend line is broken and taken resistance on the uptrend line then the trend is reversed into a downtrend.

how-what-to-trade-with-head-and-shoulders-patterns-and-inverse-head-and-shoulsers-patterns-best-time-frame-stop-loss-target-strategy-

There is the point to notice that before breaking of trend line it makes the higher high. Those two higher high the first is left shoulder and the second is the Head. Another lower high is formed after breaking of the trend line. This is the complete head and shoulders patterns.


When I sell in head and shoulders reversal pattern?

Before, you know about that when you sell? you must know about the How to draw the Neck Line of head and shoulders patterns? The neckline of head and shoulders patterns strategy is very easy you pick the two-point first is the bottom of the left shoulder and head and the second is the bottom of the right shoulder and head and draw a straight line with both points that is the neckline of head and shoulders patterns. 

Now, answer the question that is when I sell in head and shoulders pattern? There is two-point to sell first is when the trend neck is broken with the volume we take the position as short but, if the volume is not more than the previous candle then the second is wait for the retracement and sell when the retracement is taken resistance on the neckline and come back in the downside.

how-what-to-trade-with-head-and-shoulders-patterns-and-inverse-head-and-shoulsers-patterns-best-time-frame-stop-loss-target-strategy

Read Also: Fibonacci Retracements: Basic To Advance Prize Action

Head And Shoulders Pattern Time Frame

Now, we talk about, which time frame is best for the head and shoulders pattern. Three types of share marketers use the head and shoulders reversal pattern. 

first is the intraday trader, if I talk the head and shoulders time frame for an intraday trader is 15 minutes time frame. 15 minutes time frame is my favorite time frame. my second favorite time frame is the 5 minutes time frame for intraday trading.

Head And Shoulders Pattern Stop Loss

Stop Loss is one of the great factors that you never miss for intraday/any trading style. If I talk about head and shoulders pattern stop loss that is the perfect stop loss is the high price of right shoulders in any time frame.

Head And Shoulders Pattern Target

Profit booking is also important as like stop loss. If you do not know about the target of the head and shoulders pattern rules you can miss your profit sometimes so, you must know about the target.
 
In the head and shoulders pattern, the target is the high price of the head to the neckline is a perfect target. after measurement of the high price of the neckline to head. take the target from neckline breakout till that height.

The Inverse Head And Shoulders Pattern Rules

The inverse head and shoulders patterns strategy is also a very profitable strategy for any trading style. But always we must remember some important things at the execution of the inverse head and shoulders pattern rules. These rules are very common to all Reversal Patterns that is 

Rule.1: Always remember that at the time of pattern breakout the Volume must be greater than the previous some candle.

Rule.2:  Always take the trade at the breaking of important trend lines.

Rule.3: Always remember that larger patterns are more powerful than smaller patterns.

Rule.4: The Top is more volatile than the Bottom.

how-what-to-trade-with-head-and-shoulders-patterns-and-inverse-head-and-shoulsers-patterns-time-frame-stop-loss-target-strategy

The Inverse Head And Shoulder Reversal Patterns

The Inverse Head And Shoulders Pattern is always formed in the downtrend and it's reverse the trend in an uptrend. If I compare all the reversal patterns the inverse head and shoulders pattern is a more reliable pattern. This is the king of the major reversal patterns. 

To understand the inverse head and shoulders reversal pattern you must know about Trend Line: Basic To Advance Prize Action(How To Use Trend Line). If you read before, you know that the downtrend reverses into an uptrend when the downtrend line is broken and taken support on the downtrend line then the trend is reversed into an uptrend.

There is a point to notice that before the breakout of the trend line it makes the lower low. That two lower lows.  The first is the left shoulder and the second is the Head. Another higher low is formed after the breakout of the trend line. This is the complete inverse head and shoulders patterns.


When should I buy in inverse head and shoulders reversal pattern?

Before, you know about that when you buy it? you must know about the How to draw the Neck Line of inverse head and shoulders pattern? The neckline of the inverse head and shoulders patterns strategy is very easy you pick the two-point first is the top of left shoulder and head and the second is the top of right shoulder and head and draw a straight line with both points that is the neckline of inverse head and shoulders patterns. 

Now, answer the question that is when should I buy in inverse head and shoulders pattern? There is two-point to buy first is when the trend neck is broken with the volume we take the position as long but, if the volume is not more than the previous candle then the second is wait for the retracement and buy when the retracement is taken support on the neckline and come back in the upside.

how-what-to-trade-with-head-and-shoulders-patterns-and-inverse-head-and-shoulsers-patterns-best-time-frame-stop-loss-target--strategy

Inverse Head And Shoulders Pattern Time Frame

Now, we talk about, which time frame is best for inverse head and shoulders pattern. Three types of share marketers use the inverse head and shoulder reversal pattern. 

first is the intraday trader, if I talk the inverse head and shoulders time frame for an intraday trader is 15 minutes time frame. 15 minutes time frame is my favorite time frame. my second favorite time frame is the 5 minutes time frame for intraday trading.

Inverse Head And Shoulders Pattern Stop Loss

Stop Loss is one of the great factors that you never miss for intraday/any trading style. If I talk about inverse head and shoulders pattern stop loss that is the perfect stop loss is the low price of right shoulders in any time frame. I try to understand you in the picture that is given below...

Read Also: Trend Line: Basic To Advance Prize Action CH-3 (The Fan Principle And The Channel Line)

Inverse Head And Shoulders Pattern Target

Profit booking is also important as like stop loss. If you do not know about the target of the inverse head and shoulders pattern rules you can miss your profit sometimes so, you must know about the target. 

In the inverse head and shoulders pattern, the target is the low price of the head to the neckline is a perfect target. after measurement of the low price of the neckline to head. take the target from neckline breakout till that low.

Why Sometimes Head And Shoulders Pattern Failure

In the head and shoulders pattern. you must be remembered that after breaking of the neckline. It never crosses the neckline again if the prize crosses again the neckline it could be a sign of the failure of the head and shoulder pattern. 

There is two most important lesson, you must be remembered that first is non of the chart pattern is nonmailable. They work most of the time but never all the time. And the second lesson is the technical trader must be always ready for that he/she could be wrong.

Why-Sometimes-Head-And-Shoulders-Pattern-Failure

One of the keys to survival in the stock market is keeping the losses small, quite the losing trade as quickly as possible.

There are some common questions related to head and shoulders patterns asked by people-

1. Is a head and shoulders pattern bullish?
Ans. No, the head and shoulders pattern is a bearish pattern and this is the king of a major reversal pattern.

2. How accurate is the head and shoulders pattern?
Ans. The accuracy of the head and shoulders pattern depends on your trading skills but, if I talk my accuracy in head and shoulders patterns is above 90% because I know that
which pattern could be a failure to know read the full post.

3. Is head and shoulders a continuation pattern?
Ans. No, head and shoulders patterns is a reversal pattern. It always found at the top of the charts and gives the bearish signal after this pattern.

4. How do you trade head and shoulders chart patterns?
Ans. The trading with head and shoulders is a very easy task. You have to know some things before trading with head and shoulders patterns. As head and shoulders pattern target, stop loss, time-frame, and more
cum

There are some common questions related to inverse head and shoulders patterns asked by people-

1. Is an inverse head and shoulders pattern bearish?
Ans. Yes, the inverse head and shoulders pattern is a bullish pattern and this is the queen of a major reversal pattern.

2. How accurate is the inverse head and shoulders pattern?
Ans. The accuracy of inverse head and shoulders pattern also depends on your trading skills but, if I talk my accuracy in inverse head and shoulders patterns is above 90% because I know that
which pattern could be a failure to know read the full post.

3. Is inverse head and shoulders a continuation pattern?
Ans. No, inverse head and shoulders patterns is a reversal pattern. It always found at the bottom of the charts and gives the bullish signal after this pattern.

4. How do you trade inverse head and shoulders chart patterns?
Ans. Trading with inverse head and shoulders is a very easy task. You have to know some things before trading with inverse head and shoulders patterns. As inverse head and shoulders pattern target, stop loss, time-frame, and more

Conclusion

We learned everything about head and shoulders pattern and inverse head and shoulders pattern but before apply in your trading setup you must be practice and beck testing. Please say your view about this post in Comment. Your comment is valuable to us.
Please Read More...
Trend Line: Basic To Advance Prize Action CH-2 (How To Use The Trend Line?)
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