Skip to main content

Head And Shoulders Patterns Trading Strategies

Master the art of trading head and shoulders patterns with our comprehensive guide. Learn to identify, confirm, and execute trades with precision.

Pattern Trading Strategy​

1. Pattern Identification​

Head and Shoulders Pattern Example

Key identification steps:

  • Add the indicator to your chart
  • Look for clear shoulder-head-shoulder formation
  • Confirm pattern symmetry and proportions
  • Validate with volume analysis
Pro Tip

Set up alerts to get notified when patterns form or break out on your preferred timeframes.

2. Pattern Confirmation​

Breakout Recognition​

  • Watch for the grey entry point line (EP)
  • Confirm neckline breach:
    • Below red neckline for bearish patterns
    • Above blue neckline for bullish patterns

Volume Validation​

  • Look for increasing volume on breakout
  • Compare volume across pattern formation
  • Confirm trend direction

3. Trade Execution​

Entry Strategies​

  1. Conservative Entry:

    • Wait for neckline breakout
    • Enter on first retest
    • Confirm with volume

  2. Aggressive Entry:

    • Enter at pattern completion
    • Use tighter stops
    • Scale in on breakout

4. Risk Management​

Risk Management Setup

Stop Loss Placement​

  • Set stops at the red SL line
  • Consider volatility
  • Account for market noise

Take Profit Targets​

Three profit targets available:

  • TP1: Conservative target (1.5R)
  • TP2: Moderate target (2R)
  • TP3: Aggressive target (3R)

5. Trade Management​

Position Monitoring​

  • Use Trend Bars Pro for trend confirmation
  • Track volume for breakout validation
  • Monitor pattern completion

Exit Strategies​

  1. Partial Exits:

    • Scale out at each TP level
    • Move stops to breakeven
    • Protect profits

  2. Full Exit:

    • Pattern completion
    • Target reached
    • Stop hit

Advanced Features​

Market Scanner​

Scan multiple markets simultaneously:

  • Up to 20 different symbols
  • Real-time pattern detection
  • Automated alerts
Scanner Usage

Learn more about our powerful Chart Pattern Scanner for automated pattern detection.

FAQ​

Next Steps​

Pattern Scanner

Automate your pattern detection across multiple markets

Risk Management

Master advanced risk management techniques