A head and shoulders pattern in Forex can be visually identified on a chart when an asset's price action creates a formation of 3 peaks, similar to the human head and shoulders. As in human anatomy, the "shoulders" peaks are similar in height with a highest "head" peak.

This pattern can be seen, or interpreted, as an iminent trend reversal. In fact, it's accuracy that a bullish trend is about to end with an exaustion and reverse, is considered by several traders as a top signal and one of the most reliable trend reversal patterns.

Part of our multimedia library, learn in this video what is a head and shoulder pattern in Forex and how to use it on your trading strategy.

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If you would like to know more about other trading strategies, including support and resistance, pivots and Fibonacci retracements, please read our complete article 3 Professional Forex Trading Strategies That Work.