Part 34 Technical Analysis – Head and Shoulders Price Formation

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Contents

Part 34: Technical Analysis – Head and Shoulders Price Formation

In today’s Technical Analysis Series, we shall take a look at the Head and Shoulders price formation (Head and Shoulders – H&S). It is a very specific scheme capable of reversing a trend, much like a double top. H&S is less common; however, it has a higher completion rate – in conventional markets, this pattern reaches its target in about 85% of cases.

The name of the price formation implies a lot about what it looks like – the price creates a peak (left shoulder), then a higher peak (which represents the head) and finally a lower peak (right shoulder). But the peaks are not the only thing that matters. The most important part is the so-called neckline, which is the support level to which the price must return after the creation of each peak.

The assumption of the formation is such that if the market completes the formation (see below), we can expect a fall in price.

The whole thing is better illustrated in the following scheme:

Basic sketch of the Head and Shoulders Formation (Head and Shoulders)

Completion of H&S formation

Very much like with the double vertex formation, in order to consider the Head and Shoulders formation complete, the price must return back to the neckline when the right shoulder is completed and breakthrough this support. It is therefore necessary for at least one candle on the monitored timeframe to close under the neckline, in which case the formation is considered complete and we should expect a further decline in price.

On the following picture, you can see what it looks in practice.

Head and Shoulders formation in practice – the breakdown

Traders often speculate on the price drop even before the neckline breakthrough. This is a mistake because regardless of the formation, the neckline is a support that can still bounce the price back up.

An example of this may be the following situation shown on the graph below, where the H&S formation had actually depicted, but then the price bounced off the neckline and continued up higher.

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The Head and Shoulders formation in practice – the Bounce

Inverse Head and Shoulders formation

The opposite version of this formation is called the Inverse Head and Shoulders formation. In case of this formation, the market shows us the possible bottom and the bounce. The look and all the rules of the inverse formation are exactly the same as of the classic version of the Head and Shoulders formation (see the following figure).

The Inverse Head and Shoulders formation

Variations of this formation

In this article, we have so far only gone through ideal examples. In real trading, however, you can encounter primarily two other different variations:

  • Inclined neckline
  • Non-symmetric shoulders

Both of these variations are very well illustrated on the example of the Inverse Head and Shoulders formation as seen below:

Variation of Head and Shoulders formation

The important thing to know is that even if both variations ruin the appearance of the formation, it doesn’t really matter as even in this case, the formation is absolutely valid once it goes through the neckline.

Utilization

In most cases, this formation is known primarily as a reverse pattern, one which is reversing the direction of the trend. So, if we consider a downtrend, at the end of which the Inverse Head and Shoulders formation appears, we can expect this formation to reverse the trend; at least in the short term. The following image serves as an example:

The Breakthrough of Head and Shoulders Formation in practice – reversing the trend

However, it is much less known that the Head and Shoulders formation (or Inverse Head and Shoulders formation) is an even better continuation pattern. This means that, for example, if we consider a trend going in the up direction with a pattern of Inverse Head and Shoulders formation as part of the correction, it has a higher chance of completing and reaching its targets than in the previous case.

Here is an example:

Reversing of a trend in the Head and Shoulders formation

How to place Stop-loss and Take profit orders

Sure – if you think you can estimate how the price will behave, you can open a trade and start making money. But how to set up such a trade?

The stop-loss order can generally be put in two places – either above the top of the right shoulder or up the highest peak of the formation, i.e. the top of the head.

You can also choose from two levels when placing the take profit order or use both.

  • The first level for the take profit is obtained by measuring the height of the right shoulder – the distance between the top of the shoulder and the neckline. We will then transfer the same size to the point where the neckline was broken and consequently determine the value of the collection of the first profits.
  • The second level is obtained in the same way, only the head height is transferred to the point-break of the neckline.

Let’s again show the placing of the stop-loss and also the take profit on one of the previous examples:

Stop-loss and Take profit Settings for Head and Shoulders formation

That’s all for today’s article. We hope that you have learned something new and that all of your price formation trades will go as planned. ��

If you’re not clear on something, please let us know in the comments below the article. We read them on a daily basis!

Author

More about the author J. Pro

Unlike Stephen (the other author) I have been thinking mainly about online business lately. I wasn’t very successfull with dropshipping on Amazon and other ways of making money online, and I’d only earn a few hundreds of dollars in years. But then binary options caught my attention with it’s simplicity. Now I’m glad it did because it really is worth it. More posts by this author

How to Trade the Head and Shoulders Pattern

The head and shoulders chart pattern is a popular and easy to spot pattern in technical analysis that shows a baseline with three peaks, the middle peak being the highest. The head and shoulders chart depicts a bullish-to-bearish trend reversal and signals that an upward trend is nearing its end.

The pattern appears on all time frames and can, therefore, be used by all types of traders and investors. Entry levels, stop levels and price targets make the formation easy to implement, as the chart pattern provides important and easy to see levels.

How To Trade The Head-And-Shoulders Pattern

What the Pattern Looks Like

First, we’ll look at the formation of the head and shoulders pattern and then the inverse head and shoulders pattern.

Head and Shoulders

Formation of the pattern:

  • Left shoulder: Price rise followed by a price peak, followed by a decline.
  • Head: Price rise again forming a higher peak.
  • Right shoulder: A decline occurs once again, followed by a rise to form the right peak which is lower than the head.

Formations are rarely perfect, which means there may be some noise between the respective shoulders and head.

Figure 1: SOLF Daily Chart – Head and Shoulders

Source: Think or Swim – TD Ameritrade

Inverse Head and Shoulders

Formation of the pattern:

  • Left shoulder: Price declines followed by a price bottom, followed by an increase.
  • Head: Price declines again forming a lower bottom.
  • Right shoulder: Price increases once again, then declines to form the right bottom.

Again, formations are rarely perfect. There may be some market noise between the respective shoulders and head.

Figure 2: SPY Daily Chart – Inverse Head and Shoulders

Source: Think or Swim – TD Ameritrade

Placing the Neckline

The neckline is the level of support or resistance that traders use to determine strategic areas to place orders. To place the neckline, the first step is to locate the left shoulder, head, and right shoulder on the chart. In the standard head and shoulders pattern (market top), we connect the low after the left shoulder with the low created after the head. This creates our “neckline” – the yellow line on the charts. We’ll discuss the importance of the neckline in the following section. In an inverse head and shoulders pattern, we connect the high after the left shoulder with the high formed after the head, thus creating our neckline for this pattern.

How To Trade The Head-And-Shoulders Pattern

How to Trade the Pattern

It’s important that traders wait for the pattern to complete. This is so because a pattern may not develop at all or a partially developed pattern may not complete in the future. Partial or nearly completed patterns should be watched, but no trades should be made until the pattern breaks the neckline.

In the head and shoulders pattern, we are waiting for price action to move lower than the neckline after the peak of the right shoulder. For the inverse head and shoulders, we wait for price movement above the neckline after the right shoulder is formed.

A trade can be initiated when the pattern completes. Plan the trade beforehand, writing down the entry, stops, and profit targets as well as noting any variables that will change your stop or profit target.

The most common entry point is when a breakout occurs – the neckline is broken and a trade is taken. Another entry point requires more patience and comes with the possibility that the move may be missed altogether. This method involves waiting for a pullback to the neckline after a breakout has already occurred. This is more conservative in that we can see if the pullback stops and the original breakout direction resumes, the trade may be missed if the price keeps moving in the breakout direction. Both methods are shown in Figure 3.

Figure 3: SPY Daily Chart – Possible entry points

Source: Think or Swim – TD Ameritrade

Placing Your Stops

In the traditional market top pattern, the stops are placed just above the right shoulder (topping pattern) after the neckline is penetrated. Alternatively, the head of the pattern can be used as a stop, but this is likely a much larger risk and thus reduces the reward to risk ratio of the pattern. In the inverse pattern, the stop is placed just below the right shoulder. Again, the stop can be placed at the head of the pattern, although this does expose the trader to greater risk. In Figure 3, the stop would be placed at $104 (just below right shoulder) once the trade was taken.

Setting Your Profit Targets

The profit target for the pattern is the price difference between the head and low point of either shoulder. This difference is then subtracted from the neckline breakout level (at a market top) to provide a price target to the downside. For a market bottom, the difference is added to the neckline breakout price to provide a price target to the upside.

As SPY is a heavily traded ETF representing the broader market, the profit target for the inverse head and shoulders pattern in Figure 2 would be:

$113.20 (this is the high after the left shoulder) – $101.13 (this is the low of the head) = $12.07

This difference is then added to the breakout price (subtracted in the case of a regular head and shoulders pattern). The breakout price is right around $113.25, giving us a profit target of $125.32 ($113.25 + $12.07).

Sometimes investors have to wait a long time – up to several months – between spotting the breakout and reaching the ideal profit target. Monitoring your trades in real-time can help you anticipate their outcomes.

Why the Head and Shoulders Pattern Works

No pattern is perfect, nor does it work every time. Yet there are several reasons why the chart pattern theoretically works (the market top will be used for this reasoning, but it applies to both):

  • As price falls from the market high (head), sellers have begun to enter the market and there is less aggressive buying.
  • As the neckline is approached, many people who bought in the final wave higher or bought on the rally in the right shoulder are now proven wrong and facing large losses – it is this large group that will now exit positions, driving the price toward the profit target.
  • The stop above the right shoulder is logical because the trend has shifted downwards – the right shoulder is a lower high than the head – and therefore the right shoulder is unlikely to be broken until an uptrend resumes.
  • The profit target assumes that those who are wrong or purchased the security at a poor time will be forced to exit their positions, thus creating a reversal of similar magnitude to the topping pattern that just occurred.
  • The neckline is the point at which many traders are experiencing pain and will be forced to exit positions, thus pushing the price toward the price target.
  • Volume can be watched as well. During inverse head and shoulders patterns (market bottoms), we would ideally like the volume to expand as a breakout occurs. This shows increased buying interest that will move the price towards the target. Decreasing volume shows a lack of interest in the upside move and warrants some skepticism.

The Pitfalls of Trading Head and Shoulders

As stated, the pattern is not perfect. Here are some potential problems with trading a head and shoulders pattern:

  • You need to find patterns and watch them develop, but you should not trade this strategy until the pattern is completed. So it could mean a long period of waiting.
  • It will not work all the time. The stop levels will be hit sometimes.
  • The profit target will not always be reached, so traders may wish to fine-tune how market variables will affect their exit from the security.
  • The pattern is not always tradable. For example, if there is a massive drop on one of the shoulders due to an unpredictable event, then the calculated price targets will likely not be hit.
  • Patterns can be subjective. One trader may see a shoulder, where another does not. When trading patterns, define what constitutes a pattern for you beforehand – given the general guidelines above.

The Bottom Line

Head and shoulders patterns occur on all time frames and can be seen visually. While subjective at times, the complete pattern provides entries, stops and profit targets, making it easy to implement a trading strategy. The pattern is composed of a left shoulder, head, then followed by a right shoulder. The most common entry point is a breakout of the neckline, with a stop above (market top) or below (market bottom) the right shoulder. The profit target is the difference of the high and low with the pattern added (market bottom) or subtracted (market top) from the breakout price. The system is not perfect, but it does provide a method of trading the markets based on logical price movements.

Head And Shoulders Pattern

What Is A Head And Shoulders Pattern?

A head and shoulders pattern is a chart formation that resembles a baseline with three peaks, the outside two are close in height and the middle is highest. In technical analysis, a head and shoulders pattern describes a specific chart formation that predicts a bullish-to-bearish trend reversal. The head and shoulders pattern is believed to be one of the most reliable trend reversal patterns. It is one of several top patterns that signal, with varying degrees of accuracy, that an upward trend is nearing its end.

Understanding A Head And Shoulders Pattern

The head and shoulders pattern forms when a stock’s price rises to a peak and subsequently declines back to the base of the prior up-move. Then, the price rises above the former peak to form the “nose” and then again declines back to the original base. Then, finally, the stock price rises again, but to the level of the first, initial peak of the formation before declining back down to the base or neckline of chart patterns one more time.

Key Takeaways

  • A head and shoulders pattern is a chart formation that resembles a baseline with three peaks, the outside two are close in height and the middle is highest.
  • A head and shoulders pattern describes a specific chart formation that predicts a bullish-to-bearish trend reversal.
  • The head and shoulders pattern is believed to be one of the most reliable trend reversal patterns.

What Is The Head And Shoulders Pattern?

What Does A Head And Shoulders Pattern Tell You?

A head and shoulders pattern is comprised of three component parts:

  1. After long bullish trends, the price rises to a peak and subsequently declines to form a trough.
  2. The price rises again to form a second high substantially above the initial peak and declines again.
  3. The price rises a third time, but only to the level of the first peak, before declining once more.

The first and third peaks are shoulders, and the second peak forms the head. The line connecting the first and second troughs is called the neckline.

An inverse or reverse head and shoulders pattern is also a reliable indicator which can also signal that a downward trend is about to reverse into an upward trend. In this case, the stock’s price reaches three consecutive lows, separated by temporary rallies. Of these, the second trough is the lowest (the head) and the first and third are slightly shallower (the shoulders). The final rally after the third dip signals that the bearish trend has reversed and prices are likely to keep rallying upward.

Tug-of-War

Stock prices are the result of a continuous game of tug-of-war; whether a stock’s price goes up or down is the direct result of how many people are on each team. Those who believe a stock’s price will go up are called bulls, and those who believe the stock will go down are called bears. If more of a stock’s shareholders are bears, then its price will go down as they sell their shares to avoid losing money. If more people are bullish, then the price will go up as new investors buy in to take advantage of the opportunity.

Inverse Head And Shoulders

The opposite of a head and shoulders chart is the inverse head and shoulders, also called a head and shoulders bottom, is inverted with the head and shoulders top used to predict reversals in downtrends. This pattern is identified when the price action of a security meets the following characteristics: the price falls to a trough and then rises; the price falls below the former trough and then rises again; finally, the price falls again but not as far as the second trough. Once the final trough is made, the price heads upward, toward the resistance found near the top of the previous troughs.

The Limitations Of Head And Shoulders

Like all charting patterns, the ups and downs of the head and shoulders pattern tell a very specific story about the battle being waged between bulls and bears.

The initial peak and subsequent decline represent the waning momentum of the prior bullish trend. Wanting to sustain the upward movement as long as possible, bulls rally to push the price back up past the initial peak to reach a new high (the head). At this point, it is still possible that bulls could reinstate their market dominance and continue the upward trend.

However, once price declines a second time and reaches a point below the initial peak, it is clear that bears are gaining ground. Bulls try one more time to push price upward but succeed only in hitting the lesser high reached in the initial peak. This failure to surpass the highest high signals the bulls’ defeat and bears take over, driving the price downward and completing the reversal.

The 7 Best Price Action Patterns Ranked by Reliability

In the world of technical analysis there are a lot of traders who talk about price action patterns but few actually discuss how accurate they are in the live market. There are a number of useful patterns we watch for here at Samurai Trading Academy and although we don’t trade these patterns directly, they are very useful to understand the current structure of the market and quickly assess our trading opportunities.

Testing Common Price Action Patterns

The statistics on the price action patterns below were accumulated through testing of 10 years of data and over 200,000 patterns. In all these cases the price action patterns were only included once they were considered to be complete, which usually means a full break of a support/resistance area or trendline. The requirements for a completed pattern are discussed below for each individual case.

7A. Bull Flag Pattern (67.13% Success)

7B. Bear Flag Pattern (67.72% Success)

The flag is a continuation pattern that can occur after a strong trending move. It consists of a strong bullish trending move followed by a rapid series of lower highs and lower lows for a bull flag, or a strong bearish trending move followed by a rapid series of higher lows and higher highs for a bear flag. These patterns are small hesitations in strong trends, so they are usually only composed of a small number of price bars (about 20). Longer and wider patterns are defined as channels (see below).

The flag pattern appears as a small rectangle that is usually tilted against the prevailing trend in price. The best flag patterns have two features: 1) a very strong run in price (near vertical) prior to the setting up of the flag and 2) a tight flag that occurs right on the upper (or lower) edge of that run. The higher and tighter (narrower) the pattern, the higher percentage that the pattern will break favourably in the prevailing trend direction.

This pattern is considered successful when it breaks the upper trendline in a bull flag (or the lower trendline in a bear flag) and then proceeds to cover the same distance as the prior trending move starting from the outer edge of the pattern. Note that most pattern projections are measured from the breakout point, but flags, pennants, and channel patterns are all measured from the outer edge of the pattern instead as shown by the red arrows in the chart examples.

6A. Ascending Triangle Pattern (72.77%)

6B. Descending Triangle Pattern (72.93%)

The triangle pattern usually occurs in trends and acts as a continuation pattern. It’s defined by a bullish trending move followed by two or more equal highs and a series of higher lows for an ascending triangle pattern, and a bearish trending move followed by two or more equal lows with a series of lower highs for a descending triangle pattern.

The pattern is complete when price breaks above the horizontal resistance area in an ascending triangle, or below the horizontal support area in a descending triangle. The pattern is considered successful if price extends beyond the breakout point for at least the same distance as the pattern width (see red arrows).

5A. Ascending Channel Pattern (73.03%)

5B. Descending Channel Pattern (72.88%)

The channel price pattern is a fairly common sight in trending moves that have good volume and acts as a delayed continuation pattern. Note that the channel pattern is similar to the flag in that they both have periods of consolidation between parallel trendlines, but the channel pattern is generally wider and consists of many more bars which increases its strength and success rate.

The ascending channel pattern is defined by a bullish trending move followed by a series of lower highs and lower lows, that form parallel trendlines containing price. The descending channel pattern is defined by a bearish trending move followed by a series of higher lows and higher highs, that form parallel trendlines that contain price.

This pattern is complete when price breaks through the upper trendline in an ascending channel or below the lower trendline in a descending channel pattern. The pattern is considered successful when price has achieved a movement from the outer edge of the pattern equal to the distance of the initial trending move that started the channel pattern.

4A. Double Top Pattern (75.01%)

4B. Double Bottom Pattern (78.55%)

The double top/bottom is one of the most common reversal price patterns. The double top is defined by two nearly equal highs with some space between the touches, while a double bottom is created from two nearly equal lows. Generally, the wider the gap between touches the more powerful the pattern becomes.

The pattern is complete when price breaks below the swing low point created after the first high in a double top, or when price breaks above the swing high point created by the first low in a double bottom. The pattern is considered a success when price covers the same distance following the breakout as the distance from the double high to the recent swing low point in a double top, or the distance from the double low to the recent swing high in a double bottom (see red arrows).

This is actually the first of our patterns with a statistically significant difference between the bullish (double bottom) and bearish (double top) version. As we can see, the double bottom is a slightly more effective breakout pattern than the double top, reaching its target 78.55% of the time compared to 75.01%.

3A. Triple Top Pattern (77.59%)

3B. Triple Bottom Pattern (79.33%)

The triple top/bottom is another variation of reversal price patterns. The triple top is defined by three nearly equal highs with some space between the touches, while a triple bottom is created from three nearly equal lows. Generally, the wider the gap between touches the more powerful the pattern becomes.

The pattern is complete when price breaks below the swing low points created between the highs in a triple top, or when price breaks above the swing high points created between the lows in a triple bottom. The pattern is considered a success when price covers the same distance after the breakout as the distance from the triple high to the furthest swing low point in a triple top, or the distance from the triple low to furthest swing high in a triple bottom (see red arrows).

2A. Bullish Rectangle Pattern (78.23%)

2B. Bearish Rectangle Pattern (79.51%)

The rectangle price pattern is a continuation pattern that follows a trending move. It is very similar to the channel pattern, except that the pattern does not have a slope against the preceding trend which gives it a higher chance of successful continuation.

The rectangle pattern is defined by a strong trending move followed by two or more nearly equal tops and bottoms that create two parallel horizontal trendlines (support and resistance). The only difference between the bullish and bearish variations is that the bullish rectangle pattern starts after a bullish trending move, and the bearish rectangle pattern starts after a bearish trending move.

It’s worth noting that these rectangle price patterns are essentially failed double and triple tops/bottoms. Because the swing points following the double and triple highs or lows don’t break to confirm the patterns, those reversals are not confirmed. This is why it can be very dangerous to try to anticipate double and triple tops/bottoms, because often they don’t fully complete and price will resume the prior trend.

The rectangle pattern is complete when price breaks the resistance line in a bullish rectangle, or when price breaks the support line in a bearish rectangle. The pattern is considered successful when price extends beyond the breakout point by the same distance as the width of the rectangle pattern.

1A. Head and Shoulders Pattern (83.04%)

1B. Inverted Head and Shoulders Pattern (83.44%)

The head and shoulders patterns are statistically the most accurate of the price action patterns, reaching their projected target almost 85% of the time. The regular head and shoulders pattern is defined by two swing highs (the shoulders) with a higher high (the head) between them. The inverted head and shoulders pattern has two swing lows with a lower low between them. The two outer swing highs/lows don’t have to be at the same price, but the closer they are to the same area the stronger the pattern generally becomes.

The pattern is complete when price breaks through the “neckline” created by the two swing low points in a head and shoulders, and the two swing high points in an inverted head and shoulders. In the chart examples above this line is horizontal, but it can also be sloped as the swing points do not have to be exactly the same to have a completed pattern. These patterns are considered complete when price breaks out from the neckline and moves a distance equal to the distance from the neckline to the head of the pattern.

Dishonorable Mention: Bullish Pennant Pattern ( 54.87% ) and Bearish Pennant Pattern ( 55.19% )

Although we’ve already covered the seven best price action patterns, I thought it would be useful to include one more pattern because of it’s comparatively poor performance despite being commonly used. The pennant pattern is one that you often see right next to the bull and bear flag pattern in the textbooks, but rarely does anyone talk about its low success rate. While the flag itself isn’t an exceptional pattern at just under a 70% success rate, the pennants come in well below that.

Like the flag, the pennant often occurs in high momentum markets after a strong trending move, but the tight price formation that occurs can lead to breakouts against the preceding trend almost as often as we get continuation. The slight difference in the price pattern formation between flags and pennants is an important distinction that can make a big difference in your trading results so it’s well worth being aware of while watching the market develop during your trading day.

Cody Hind

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Gold technical analysis: Flirting with head and shoulders neckline support near $1480 region

Gold extended its steady intraday decline through the mid-European session and dropped to fresh monthly lows, around the $1480 region in the last hour. The downtick dragged the commodity back below the 23.6% Fibonacci level of the $1266-$1557 move up and closer to important horizontal support near the $1480 region.

The mentioned support marks key neck-line support of a bearish head and shoulders pattern formation on the daily chart. This neck-line support, if broken, will now be seen as a key trigger for bearish traders and set the stage for an extension of the recent corrective slide from multi-year tops, towards testing the $1450-47 support zone.

The latter marks a previous strong resistance and also coincides with 38.2% Fibo. level. Hence, the mentioned support should help limit any further downside ahead of this week’s important release of the US monthly jobs report and a fresh round of high-level US-China trade negotiations.

On the flip side, the 23.6% Fibo. level, around the $1490 region, closely followed by the key $1500 psychological mark now seems to act as an immediate resistance zone. Above this area, the commodity is likely to head back towards $1510 intermediate resistance en-route the shoulder resistance near the $1522 region.

Gold daily chart

XAU/USD

Overview
Today last price 1484.83
Today Daily Change -12.07
Today Daily Change % -0.81
Today daily open 1496.9
Trends
Daily SMA20 1509.71
Daily SMA50 1492.86
Daily SMA100 1423.57
Daily SMA200 1359.62
Levels
Previous Daily High 1507.5
Previous Daily Low 1487.2
Previous Weekly High 1535.42
Previous Weekly Low 1487.2
Previous Monthly High 1554.63
Previous Monthly Low 1400.9
Daily Fibonacci 38.2% 1494.95
Daily Fibonacci 61.8% 1499.75
Daily Pivot Point S1 1486.9
Daily Pivot Point S2 1476.9
Daily Pivot Point S3 1466.6
Daily Pivot Point R1 1507.2
Daily Pivot Point R2 1517.5
Daily Pivot Point R3 1527.5

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Latest Forex News

Latest Forex News

EUR/USD dips below amid coronavirus headlines, ahead of NFP

EUR/USD is trading below 1.08, extending its losses. Coronavirus cases exceed one million and deaths are above 50,000, more than half in Europe. US Non-Farm Payrolls for March are awaited.

GBP/USD falls toward 1.23 amid sour mood, after UK data

GBP/USD has been dropping towards 1.23 as the market mood sours. Final UK Services PMI dropped to 34.5 points, worse than expected. US Non-Farm Payrolls are awaited.

Forex Today: Dollar looks strong, oil extends fall, all eyes on first corona-linked Non-Farm Payrolls

The US dollar has been consolidating its gains as tension mounts toward the US Non-Farm Payrolls, in typical jobs Friday trading. Economists expect the first coronavirus-impacted jobs figures to show a loss of only 100,000 jobs.

WTI: Depressed below $24.00 as traders fail to cheer hopes for production cut

WTI fails to keep buyers hopeful as fears of coronavirus outbreak renew. China’s Caixin Services PMI came in positive, US President Donald Trump reiterated hopes for Saudi-Russian pact for an oil production cut. US economic docket, virus news will be the key for near-term direction.

Gold: Probes monthly resistance trendline above $1,600

Gold struggles between 61.8% Fibonacci retracement and near-term key resistance line. Bullish MACD, sustained trading beyond key supports keep buyers hopeful. 100-day SMA, 38.2% will keep sellers away.

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