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Visual Representation
Your head and Shoulders Top Chart Pattern has a left shoulder, a head, plus a right shoulder. The Neckline is the line that is connecting both lows of the formation also known as valleys. The neckline is often times formed as a double bottom, nevertheless the price-levels of the two lows can even be different. We would refer to this as an up-sloping or down-sloping neckline.

Psychological Movements
The left shoulder is formed after an extensive go on to the upside. Bears then push the purchase price down forming the 1st valley. The Bulls dominate again, reaching a better high in the market, forming the head. The Bears steer clear of the move and push the cost down to form the second valley. The best shoulder is shaped when price moves up again but remains under the high of the head. In a last move prices are pushed down with higher pressure of the Bears lastly breaks the neckline towards the downside.  Head and Shoulders Chart Pattern

Trade Management
We enter a trade, only after the Head and Shoulders Top Pattern has completed and value closes below the neckline. The stop-loss rests above the right shoulder. The money target for the pattern equals the range from the head to the neckline.  Head and Shoulders

One Note
Inside our Trading the up-sloping Head and Shoulders Top Chart Pattern outperforms the double bottom or down sloping Head and Shoulders Chart Pattern.
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