Here we have a Head and Shoulders pattern which is usually used to identify reversals or change in trend.
As this is a small timeframe, I will consider the break of the neckline a reversal rather than a change in the overall trend.
To determine an uptrend, there should be at least 2 Higher highs and 2 lower Lows.
For a down trend, you need at least 2 Lower highs and 2 lower lows to confirm.
A head and shoulders pattern is found at the bottom or top of a trend and can be a signal of a new trend direction.
The best way to trade it is wait for price to break the neckline, retest the neckline and if the candle (of your time frame) closes out of the neckline, then follow the direction of the breakout.
If price does this, for the above chart, we can short to the two Take Profit zones below.
As this is a small timeframe, I will consider the break of the neckline a reversal rather than a change in the overall trend.
To determine an uptrend, there should be at least 2 Higher highs and 2 lower Lows.
For a down trend, you need at least 2 Lower highs and 2 lower lows to confirm.
A head and shoulders pattern is found at the bottom or top of a trend and can be a signal of a new trend direction.
The best way to trade it is wait for price to break the neckline, retest the neckline and if the candle (of your time frame) closes out of the neckline, then follow the direction of the breakout.
If price does this, for the above chart, we can short to the two Take Profit zones below.
Trade fechado: objetivo atingido:
Good play