Trading Idea - #DAX
Sell/Short after head and shoulders pattern forms!
Entry: 15.290 (the neck line)
Target: 14.937 (the head height)
1. the initial rally into the pattern is often associated with a strong rise.
2. the first shoulder forms where price peaks before falling back to a support level - the neckline.
3. once the market reaches the neckline, it rallies to make a higher high before pulling back to the neckline.
4. the market then bounces off the neckline again, this time making a lower high than the previous bounce off the neckline.
5. the pattern is only confirmed when the sell-off from the second shoulder breaks below the neckline, after which the target equals the distance between the neckline and the top of the "head".
Sell/Short after head and shoulders pattern forms!
Entry: 15.290 (the neck line)
Target: 14.937 (the head height)
1. the initial rally into the pattern is often associated with a strong rise.
2. the first shoulder forms where price peaks before falling back to a support level - the neckline.
3. once the market reaches the neckline, it rallies to make a higher high before pulling back to the neckline.
4. the market then bounces off the neckline again, this time making a lower high than the previous bounce off the neckline.
5. the pattern is only confirmed when the sell-off from the second shoulder breaks below the neckline, after which the target equals the distance between the neckline and the top of the "head".