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|Learn Forex Trading > Day 8 Class ( Important Chart Patterns ) > Reverse Head and Shoulders|
|Reverse Head and Shoulders|
Reverse Head and Shoulders pattern is obvious – it’s the same head and
shoulders formation we described above, except that it is “up side down”.
The reverse version of head and shoulders has following features:|
1. Left Shoulder - a fall to a low point of a chart, followed by a rise.
2. Head - currency price falls down way below the left shoulder and then goes up again.
3. Right Shoulder - final fall to the level of the left shoulder, followed by a rise.
4. The neckline – a line which connects the highest points of the graph.
The formation usually happens after long downward movements. Your job, as forex trader, is to place a long entry higher than the neckline. To calculate the target, investigate the distance between the head and the neckline. The distance represents the price movement after the breakout from the neckline.
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