All language subtitles for 11. Head And Shoulders Chart Pattern

So if you like the idea of trading double tops, triple choppy, better, in many ways it is.

So there is the thing called a triple top.

In fact, it actually has its own name, which is a chart pattern is called head and Shoulders, because

it looks like a person's head with their shoulders.

You know, it is what the pattern will look like.

So it gets its own special name other than just triple top, it's a head and shoulders.

And you'll see these support and resistance breaks here as first with head and shoulders and how it

forms.

And you'll see the trends as far as how those develop.

And again, head and shoulders as part of the reversal family of chart patterns.

So instead of a continuation of the trend, you're looking for the trend to reverse and go in the opposite

direction that originally was headed before it headed into this head and shoulder patterns.

So if we look at this pattern here of our prices in, do you see a head and shoulders, you know, this

little trickier, but this thing in the top part, maybe it's the head where we might put a face and

then do you see a head and shoulders?

In fact, let's put a let's put a face there.

There we are happy with their head.

And then you can see the pointy tops.

Those are the shoulders.

So.

Right.

So that's the head and the shoulders.

So numbers one and three there are the are the shoulders and number two is the head.

And you've basically got three tops rather than a double top.

Right.

One, two, three.

They're not all equally, you know how the double tops, they had to be within four percent of each

other, so one in three would be within four percent of each other.

But you have this kind of middle one that forms an even peak year or head on the triple top.

That's why it's a head and shoulders and it's rarer than double tops two, by the way.

So this is why when you see hand shoulder, it's a strong indicator because it's a very rare type indicator.

And you can see where an uptrend coming into the head and shoulders, by the way.

So you'd have a strong uptrend moving into it and then forms this, you know, movement a head and shoulders

pattern.

So how do we how do we look at this?

How do we trade on this?

So if you look at it, you can see we've got the uptrend and the confirmation line is in a head and

shoulders is called a neckline, because, again, we're talking about body parts.

So it's called neckline.

It also, in effect is a support line.

Right.

Our prices are going to bounce off it for a little bit before they break through.

When the neckline is broken, that's when the pattern is completed.

And you can see what's happening here is we have our uptrend and we you know, we we don't have a confirmation

line yet, by the way, because we're just in this uptrend.

But we reach this first part of the shoulder.

And Frank, that first shoulder on the left hand side of your facing the person you don't you know,

it's a shoulder yet because the pattern hasn't fully developed.

Right.

But you do know it's going down from their peak down a little bit.

So it's gone down.

A new trend has been formed, but it's definitely some temporary downward price movement.

But then it bounces back up and goes past that first shoulder and goes right up again to what's later

going to become the head.

We don't know what's ahead at this point either, because we might think, oh, it's just a continuation

of the upward trend.

We had a little pullback.

Now we're going back up and maybe we'll keep going, going, going, going upwards.

We don't know what's ahead yet, but now it's reversed back down and informing this pattern and it's

come down and gotten within four percent of that of that neckline.

So now we're looking at and we might say, oh, we might have a double bottom here.

Right.

Because it's approach and hit that support line twice.

And but it's a little bit odder because we don't we have that pickiness, a double top or assuming a

double bottom wouldn't be as peaky on the wall with it form a W, but you would you could say a double

bottom is forming, actually, but it doesn't go back up.

It goes up to the shoulder part.

And that's where you've got this triple top part.

Right.

It's it's looking at it and you can see the hand, you can see the two shoulders.

And when it makes that turn out, that second shoulder, now you can actually see the pattern.

And that's where you're really watching that support line, that confirmation line, and you're watching

for it to break through that pattern.

That would be the pattern is completed.

And so that's and that's what completes the pattern.

So, you know, to be really ready to sell in this case because it's an upward trend.

You bought, let's say, earlier in the trend and now you want to sell and book the profits that you

had earlier in the trend before it breaks through that confirmation line, goes back into a true downward

trend and maybe starts eating away at all your profits.

So that's when it's kind of fully formed on.

That is the idea of a head and shoulder.

Looks like a head and shoulders.

You could do the opposite of that, which is called inverse head and shoulder.

I mean, the person's like doing a handstand, but you can see on the far left we're in a definite downtrend

and we can see how the shoulders and the head do the same thing where they form.

But it's now the opposite way.

So you have to use your imagination to see that had their peak there of the head in the two shoulders.

And the idea, this pattern, is this a great buying opportunity because the neckline, which is your

resistance line, you know, has been.

Broken, right, it's tried to break through with the shoulders before it didn't, in fact, in the

middle it had a big deep drop.

So this baby was showing a pretty strong downtrend.

But those shoulders kept touching those peaks.

And when it tries again for the third time, she wants to purchase the third time to that neckline or

that confirmation line or that resistance line.

That's your triple that's basically your triple part of this of this inverse hand shoulder.

Same thing with the Henshall.

That's your triple part of it as well.

And this time it's going to break through.

And once we see that break through, we like this is a true inverse head and shoulder, a rare pattern,

but it happens.

And once it breaks through, now we know we should maybe look at that.

If an uptrend is fully forming, then we get in and we can now ride that uptrend going up.

That's the idea of inverse head and shoulders to trading the and shoulder or inverse head and shoulder,

depending on which way the reversal is going to happen, is the idea behind it.