Welcome to another forex education article. Today we will touch on a popular technical analysis chart pattern, the head and shoulders.
The head and shoulders is a trend reversal indicator and many believes that this is one of the more reliable pattern.
Looking at the chart above, we can see the characteristics as follows:
- An attempt to drive bullish momentum known as the left shoulder
- Another drive of bullish momentum that succeeds in extending the price further up. This is known as the head
- A last bullish attempt which fails, resulting in a lower peak and then a drop below the neckline
Typical targets include the distance between the neckline and the highest peak ( the head ).
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