Head and Shoulders Pattern
HEAD AND SHOULDERS PATTERN (HASP)
a head and two shoulders
The HASP has a structure that is visually similar to that of a head with two shoulders. It has four elements:
1. A left shoulder (a relative peak)
2. A head (a peak above both shoulders)
3. A right shoulder (a peak parallel to the left shoulder)
4. A neckline (a support or bottom of price activity).
The Head and Shoulders Pattern in Action:
Traders look at the break of the neckline as an entry position. They look at the neckline as a support level. These businessmen will set a target profit that is equal to the distance between the neckline and the head of the chart. The right shoulder is the mark for the stop loss order.
1. It is one of the most reliable chart patterns
2. It reaches its projected target in 95% probability.