Bearish Head & Shoulders Pattern (Daily)
There are many interpretations of the Head & Shoulders Pattern.
After much research and back testing I have created a simple process using bespoke levels to objectively identify and trade the pattern.
Through extensive research into Harmonic patterns (in particular the Butterfly) I have discovered how to accurately predict where the H&S pattern will occur.
The Butterfly Pattern Forms the structure of most H&S patterns.
The left shoulder forms the XA leg of the butterfly.
The CD leg then forms the Head with the D point entry creating the peak.
The Butterfly Target points then form the remaining structure.
Once the Butterfly has completed and reached TP3 (127.2% of AD) the H&S can then be traded.
Drawing the fib tool (with my bespoke levels as displayed) from the close of the candle forming the left shoulder valley to the top of the highest wick of the Head.
The first entry is at 50% with the stop at 0% and TP1 at 150%.
The second entry is at 100% with the stop at 50% and TP1 at 200%. This entry should be entered on the retest of 100% after the candle close below it.
After much research and back testing I have created a simple process using bespoke levels to objectively identify and trade the pattern.
Through extensive research into Harmonic patterns (in particular the Butterfly) I have discovered how to accurately predict where the H&S pattern will occur.
The Butterfly Pattern Forms the structure of most H&S patterns.
The left shoulder forms the XA leg of the butterfly.
The CD leg then forms the Head with the D point entry creating the peak.
The Butterfly Target points then form the remaining structure.
Once the Butterfly has completed and reached TP3 (127.2% of AD) the H&S can then be traded.
Drawing the fib tool (with my bespoke levels as displayed) from the close of the candle forming the left shoulder valley to the top of the highest wick of the Head.
The first entry is at 50% with the stop at 0% and TP1 at 150%.
The second entry is at 100% with the stop at 50% and TP1 at 200%. This entry should be entered on the retest of 100% after the candle close below it.
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