Head and Shoulder reversal (26/7/07) - 400pips!!

December 26th, 2007 expert Posted in FOREX TRADING STRATEGIES and CONCEPTS, FOREX TRADING ENTRY STRATEGIES |

Online Forex Trading concepts used:  Price patterns, Head and shoulders reversal formation, using expectations for exits, relative volatility of currencies.

The Head and shoulder formation is not always pretty and horizontal as can be seen from the trade below. We noticed that the GBPJPY again started forming a Head and Shoulder reversal formation and was battling to break through the breakout neckline. There where 3 blue candels next to 4 red channels where the price tried to break through. We placed a sell order below the the neckline and a target at 400 pips lower which was the expectation established by the approximate height of the channel in which the Head and shoulders formation formed. The price broke out and reached the target very quickly!! (only 2 x 4hour candles). The GBPJPY is the most volatile currency and these big moves are not uncommon.

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