Trading the market

Different patterns show themselves within the stock market often and can be used to help determine how the markets might act in the future. Realizing and understanding these patterns can be extremely beneficial to your success as a trader. Today we will look at Head and Shoulders patterns.

The head and shoulders pattern is a pattern that usually indicates a reversal of the trend. Its distinction is a smaller peak followed by a larger peak and another smaller peak. The 3 peaks make up the shoulders and head with the middle peak being the larger of the 3 peaks. The lows between the peaks are shown with a support level (which is at neck level). There is also an inverse head and shoulders which is the opposite of the head and shoulders.