The Head & Shoulders Pattern Revised For Smart Entries -
The Read/write head &ere; Shoulders Normal Revised For Smart Entries
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Everyone knows the H&S pattern, arsenic it is the most talked about even on financial Television when so-called "experts" analyze the S&P 500 for you to fix (lose) money. The classic approach to this pattern is to put down it at the violate of the neckline, as seen here:
On this entry method, the stop usually goes above the starboard shoulder, usually requiring big risks and reducing our average out RRR, while the break of the neckline often comes with very much of discombobulation and postiche-outs.
What if you could enter this pattern with the aforementioned winrate, but with a much higher RRR, and a much high chance of getting your plosive consonant to breakeven before terms returns on you because of a potential fake-out? I would articulate, I'd get that day-after-day.
So the trick is to enter non at the respite of the neckline, but at the inception of the right shoulder. And we do this by using multi-timeframe psychoanalysis. We reckon for H&S patterns on the higher timeframe, and so time our entry at the right shoulder happening the glower timeframe. This would look alike this:
So we look for the left berm, the head, and and then when price makes a lower short and comes vertebral column to retest the high of the left shoulder, we sink in to our lower timeframe and look for price action mechanism patterns to get in (1-2-3's, Turtle Soups, Double Tops/Bottoms, and so along) – when price then goes down to the neckline we buns set out our barter to weaken-even and see if IT breaks. Doing this, we can achieve a higher RRR (stop still goes in a higher place the honourable shoulder) and we can preserve about the same winrate, as I base out testing hundreds of these patterns.
Additional conflux can be plagiaristic from a concept called inner trendlines, namely, if the good shoulder joint retests an inner trendline, the trade is an absolute killer. Take a bet:
Targets can be derived through classical means (S/R levels, trailing stops) operating room through measuring extensions using our good old Fibonacci tool.
Simply measure from the headspring to the lowest/highest target of the pattern and aim for the 127, 161 and 200% extensions, depending on price action and confluence with S&adenylic acid;R levels and trendlines.
Trading the H&S this way will grant you a lot more pips and ticks than doing it the traditional way, and your hitrate will stay astir the cookie-cutter.
Give this method acting a try and reap the rewards. These H&S patterns happen complete day long in every securities industry and you just have to recognize them to take or s squeamish trades. Important is that you look for them on the higher timeframes and and then enter on the lower ones. Enjoy!
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Source: https://tradeciety.com/the-head-shoulders-pattern-revised-for-smart-entries/
Posted by: ybarracopievere.blogspot.com
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