Entry: Approx. 8k (Neckline break as shown above.)
Exit: $7,627 (Measure from the head peak to the neckline, add that to the neckline break)
Stop loss: $8,304 (Always above the R shoulder)
- I am not 100% satisfied with the set up on this, but generally H & S are never perfect. For now, this is close enough. I will be watching the decline of the right shoulder for any variances of the H & S rules to potentially cancel out the trade.
- Entering this trade, I always wait for the confirmation break of the neckline instead of doing so at the peak of the R shoulder, the formation needs to confirm.
- I typically expect a neckline retest upon the break, my stop is set above the right shoulder because many times buyers temporarily rally the price up out of a neckline break for one more go at a rally. There is some support directly below the neckline, a retest above the neckline would not be out of the question before completing the formation.
- The neckline break should occur with a spike. You can see the surge with the help of a indicator like the O.B.V. or C.M.F..
- Patience is the key for trading patterns.
I highly recommend you take a look at the two related ideas titled "Learn To Identify & Trade The Pattern Properly" at the bottom of this idea for further studies.
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This entire publication is merely a educational publication on how one would potentially trade this pattern. Do your own research and analysis and never rely on anyone including myself for financial advice.
Please do your own research and use my content to educate yourself.