Head & Shoulders Top Reversal Pattern Video Lecture - Chart Pattern Trading

good afternoon everyone this is
Christian with perfect stock alert calm
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this is Christian today we're going to
be looking at a Head & Shoulders
reversal pattern I want to show you guys
how to spot it and what it takes to
basically created the first thing to
note about a Head & Shoulders reversal
pattern is that it's a reversal pattern
it's a sell signal and it only forms
after an uptrend it has to be an uptrend
before these things develop typically 3
to 6 months would be the uptrend
duration before you actually saw this
thing so if you're looking at a chart
that's in a downtrend you think you see
a head and Childress pattern that would
not be accurate it has to be in an
uptrend okay so what we have here is low
point here low point here trending
higher whips hang on trending higher
this is in an uptrend ok then we have
the formation of the Head & Shoulders
reversal let me clear this up the Head &
Shoulders pattern and this looks like
the name implies the first move to the
first peak creates the left shoulder the
next move makes a higher peak higher
than the previous ok the previous was a
1344 in this case and then we got to
1370 and that's the formation of the
head pulls back down and then makes
another move back up forming what would
be the right shoulder typically you're
going to see the right shoulder and the
left shoulder going to about the same
eye it doesn't have to be you know to
the exact thing but symmetrical it
doesn't have to be that way but it
typically is all right so that's the
formation right there you have that the
left shoulder formation move higher
forming the head formation rolls back
over then to move again trying to form
another breakout but it can't go higher
and it's closed back down forms the
formation of the right shoulder this is
the head and shoulders formation and it
can be confirmed with the volume ok what
we'll see here is this move to the
upside here when we form this first
shoulder here had better volume on it
than the volume behind
the formation of the head notice that
volume drops off you're actually moving
lower here on the volume side that's
confirmation that you're seeing it
popping pattern here because price is
going higher then by pressure is able to
support you're actually seeing a false
move anytime you see a rally with low
volume you want to be cautious and
that's exactly what you're seeing in
there with a formation of the head in
the head and shoulders pattern on the
way back down here on the sell-off of
the head you'd like to see volume start
to increase you did see that here ever
so slightly and then on the end of the
right shoulder when this actually breaks
down which are the trendline in a moment
what it breaks down right here you want
to see really good volume there that's
even more confirmation okay so in this
particular case the volume was right
behind a won't always be there but in
most cases you want volume confirming
that you can get this from looking at
many different things I'm on balance
volume just a simple volume indicator or
many different other tools that might be
out there
analyzing volume but you want volume to
confirm any price note that's always
important to you okay
the neckline of the head and shoulders
pattern it you've probably heard people
talk about this draws out again you've
got the first shoulder formation the
head which goes higher and then the
second shoulder formation whenever
you're looking at this people talk about
the neckline you want to look at the two
low points starting at the end of the
left shoulder formation and the start of
the head formation and the low point at
the end of the head formation and the
start of the right shoulder those two
points you can draw a trendline across
those and they will be what's called the
neckline okay there's many different
things about this neckline that we want
to talk about here so first thing we
want to note that the neckline trend can
be exactly horizontal it can be slightly
sloping up it can be slightly sloping
down the school of thought here is that
the trend tells you how bearish the move
is going to be for example if the
neckline were to sloped down in this
nature it'd be much more bearish than
the one we're currently looking at right
now okay and it could have been more
bullish looking than more of an uptrend
like that many different ways but the
thing to note about is the direction
it's point
tells you about how bearish it really is
okay one more item to note about the
next line and the peak of the head
where's that at okay if you were to draw
a straight line from the peak of the
head right up here alright at thirteen
seventy down to the neck neckline right
here just draw a straight line from
there that gives you the projected
distance from the breakout point right
here to the low point here remember it's
just a target it's not going to be the
exact to the penny but it gives you an
idea of how far to see that or expect
that low to go and this particular case
you want a little bit lower
especially way over here but like I said
it is a target and give you some idea of
what to expect it's also quite common to
see price activity bounce back up to the
neckline like we had sat sorry saw here
and that is just a test of this that
once was acting the neckline that was
once acting as support he had project to
be bouncing off of that that was called
support now you have it coming up and
ricocheting off of that it's acting as
resistance that's quite common in a head
and shoulders pattern okay please take a
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