I guess everyone is familiar with the Head Shoulders pattern on paper but spotting one on the charts can be a real tricky one. Today, I was looking at the Bitcoin (BTC/USD) 5M chart on MT5 and I spotted one.
To spot a head & Shoulders pattern, do not look for perfection because it always appears a little rough looking on the charts and not as beautiful as it looks in the text book.
Here are the simple steps:
1. Locate the Head which is the highest peak
2. Locate the Left Shoulder which should be lower in height than the head
3.Locate the Right Shoulder which should also be lower in height than the head (but not necessarily the same height as the left shoulder)
4. Locate the Neck, which should be where the head and both shoulders sit/rest on.
When you spot a Head Shoulders pattern in an upward trend, chances are that a downward trend is around the corner (please see my screenshot). If spotted in a downward trend, then an upward trend may be coming.
How do I know the forex market is in an upward/downward trend? For me I switch to a higher timeframe (like H1 timeframe) and I get a clearer picture of the overall trend.
Just thought I should share this with y'all. Your comments are welcome as always.
Just th
