Optimism/USD Inverse Head and Shoulders: A Path to Profit?
A potential inverse head and shoulders pattern may play out on the OP/USD trading pair, here's a general outline of how one might approach trading this pattern:
// Possible Entry Point:
A common entry point for an inverse head and shoulders pattern is a break and close above the neckline following the right shoulder. Traders may wait for a confirmed breakout on increased volume to enter a long position.
// Possible Exit Point (Take Profit):
The target for an inverse head and shoulders pattern is often calculated by measuring the distance from the head to the neckline and extending that distance above the neckline from the breakout point.
// Invalidation Criteria:
The pattern becomes invalid if the price falls back below the neckline after the breakout. Another invalidation point can be if the price drops below the right shoulder, as it suggests that the pattern is failing and the downtrend may continue.
//Risk Management:
As always, it's crucial to practice proper risk management, setting a stop-loss below the right shoulder or another technical level to mitigate potential losses if the pattern does not play out as expected.
// Possible Entry Point:
A common entry point for an inverse head and shoulders pattern is a break and close above the neckline following the right shoulder. Traders may wait for a confirmed breakout on increased volume to enter a long position.
// Possible Exit Point (Take Profit):
The target for an inverse head and shoulders pattern is often calculated by measuring the distance from the head to the neckline and extending that distance above the neckline from the breakout point.
// Invalidation Criteria:
The pattern becomes invalid if the price falls back below the neckline after the breakout. Another invalidation point can be if the price drops below the right shoulder, as it suggests that the pattern is failing and the downtrend may continue.
//Risk Management:
As always, it's crucial to practice proper risk management, setting a stop-loss below the right shoulder or another technical level to mitigate potential losses if the pattern does not play out as expected.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.