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Tactics to Trade Head and Shoulder Patterns to Make Money

Posted By On 8/05/2009 09:07:00 PM Under

Head and shoulder pattern must show following confirmations:
(a) Trend should be up till Head is formed.
(b) Left shoulder has highest volume.
(c) Head has a receding volumes and right shoulder has lowest volumes.

Once the trend has been identified; a conclusive break of right shoulder means that market can fall to the level atleast till the vertical line from the support line to the head distance and same can be accurately plotted.

Tactics to Trade Head and Shoulder Patterns
(a) One can short on first sign of decline on E.
(b) Short around 50%-66% retracement.
(c) Short moment the tight uptrendline on D and E is broken.
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