This is part 21 of the series. In this video you will learn about Head and Shoulders pattern. A Head and Shoulders pattern is a chart pattern used to predict the reversal of a current uptrend. This pattern is identified when the price action of an instrument meets the following characteristics
1. Rises to a peak and subsequently declines.
2. Then the price rises above the former peak and again declines.
3. And finally rises again but not to the second peak and declines once more.
The first and third peaks are shoulders and the second peak forms the head.
Investors typically enter in to a short position when the price drops below the support of the neckline. The target for a Head and Shoulders pattern is found by subtracting the distance from the neckline to the top of the head from the bottom of the neckline.