This is a classical inverted head and shoulders pattern. The chart is self-explanatory, I suppose. The question is whether it will work or not?
Please tell me you inadvertently chopped off the bottom of the picture where the volume was. Just Technical Amnesia, I am sure.
I have heard from a few instructors from different seminars that: 1) Price pattern will not work if you are the ONLY one that see it. 2) Price pattern will not work if you have to look very hard to find it. 3) Price pattern will not work if others don't act on it. 4) Price pattern will not work if your entry timing is wrong. 5) Price pattern of one time frame could mean something else in other time frame. 6) Just because a price pattern worked before does not mean the same price pattern will work in the future. 7) price patterns work the best on the left of the hard right edge of the chart. 8) If you are looking for a particular pattern, just keep changing the time period until you find it. NO. That is NOT head and shoulder. It is double bottom. It is a channel break out. It is superman.
Hello hypostomus, Of course, I remember about volume. But I have a little problem : there is no reliable data on volume in the forex market. I can only use some indirect infomation, for example, the right side of the head is sharper then the left one.
Um, sorry, UM, I didn't recognize that it was Forex. I used to use their rubbers back when they were called Four-X, but I grew out of them. Carry on. I won't bother you again. Just hate to see people talk classical TA without wolume. However, I would look at a longer timeframe to see if TA on a longer scale trumps the shorter, as often happens.
The real question is this... Did you already go Long when the buy signals (there were two) appeared or are you going to chase the price action to try for an entry near the neckline? My point, if your already Long...the neckline is an obvious profit target. Thus, if you exit at/near the neckline...the pattern has obviously worked. By the way, since we are talking about TA which involves just about anything concerning analyzing a chart... That right shoulder has already had four pattern signals. * Two Long signals * Two Short signals All the above signals reached a WRB profit target 1. Simply, this pattern is already a big success and it hasn't even gone above the neckline area. In fact, I would consider any Long positions at/near/above the neckline as chasers when there has already been two Long signals near the support of the right shoulder. Last of all, if you expand your chart to see more of the playing field... You'll see that the Inverted Head & Shoulders pattern is a small pattern within a bigger pattern. A bigger pattern that should cause some risk exposure concerns that results in reducing your overall position size when trading against that bigger pattern. P.S. I examine GbpUsd via a different chart interval than the chart interval of your attached chart. Mark
If GBP gets stronger, the pattern will probably work. If it gets weaker, the pattern will probably fail. My best guess. Whether you make money off the pattern is an entirely different question altogether.
HS formations aren't dependable since they don't always appear at the end of moves. Pattern recognition is only one part of many TA techniques.
============ Amen; and prefer to coment on markets I have on my charts with my years of indicators, set up like i want them. Um; Yes on TA test and do & did this mourning