USDJPY - H&S Pattern at Top of Parallel Channel

Hi Traders!

The market is moving in a downtrending Channel.

So, we here have many things which confluence to each other:

Firstly, we have the descending Parallel Channel from the H4 Timeframe.

As you can see, the market made a Trendline when it was moving upwards.
The Break of the Trendline marks the end of the Retracement Move.

The last time the market reached the upper Channel Line,
it also made a Head & Shoulders Pattern.


But why is the Head and Shoulders Pattern such valuable?
What's the logic behind this Pattern?


Here are some questions:

When do we have a typical uptrend?
- When we have higher Highs and higher Lows, great!

What is an indication for the Trendchange?
- A Break of structure

When do we have a break of structure?
- When the rule of higher Highs and higher Lows gets harmed

And this is exactly what happens when we have a H&S Pattern:

The head is the highest High.
The right Shoulder represents the LOWER High.
The kink between the H and the RS represents the Low.
The Breakout of the Neckline (which is at the kink/Low)
represents the lower Low.
The Retest to of the Neckline represents the second lower High.

And if we combine all that together, we have a
market, which turned to a Downtrend after the Uptrend,
having a lower High and a lower Low.

Now the market is retesting the Break of Neckline.



Thanks and successful Trading :-)!