Head & Shoulder formation

I've read alot of posts pointing out the head and shoulder formation and have learned to recognize them....but what does it indicate????

head n shoulders is a pattern formation which indicates a possible trend reversal....u recognise the head and the 2 shoulders, draw a neckline and u have a breakout line..once that line is crossed and tested depending on result it dicates a change in direction of trend.

http://www.trading-naked.com/HeadandShoulders.htm try this.u can learn a lot there.for the real example, u can find the H&S on gbp/jy on H1 by interbank data feed now, and u can find it also on Weekly gbp/jy (interbank datafeed).Hope it helps

Cheers

Thanks for taking the time to answer!

This example caught a lot of attention on the forum,
Notice the vigor of the move down as the neckline breaks.
Of course I failed to capitalize on this, being pretty new to this n'all.

The graph said it all....very helpful. Thank you.

Hi Learningpips,

Here is an example of a head and shoulders pattern.

The distance between the head and the neck line is the distance that it is expected to travel once the pattern is broken.

Head

http://i17.tinypic.com/6slq9ex.jpg

The blue line is the neckline, once the neckline is broken you can expect it to retrace to the neckline and then fall away approximately the same distance as that of the distance between the head and neckline.

Hope this helps

Hi,

Dont forget to take a look on Inverted H&S tho..