Greetings, this is me @hammadahmed112. I hope my friends you are well. I am also fine this is season 5 of week 2. yet, again I am with another crypto academy post. today, I read the article that is given by prof. @utsavsaxena11. first of all, I appreciate the efforts of prof. because he is delivered to the best of his knowledge. so, without wasting time let's go through the article:

Edited on CANVA!

1. Explain Head and Shoulder and Inverse Head and Shoulders patterns in detail with the help of real examples. What is the importance of volume in these patterns(Screenshot needed and try to explain in details)

The Crypto market is very volatile if we see the 24-hour chart of bitcoin some times it is in higher highs and most of the time it is in lower lows.

to avoid these losses we can apply the different trading strategies like RSI Indicator, Fibonacci Retracements, etc. here is the one or most easy trading strategy which is Head & Shoulder pattern.

In this strategy, we have seen the candlestick chart of any particular token. In this chart, we have seen first the left shoulder high the middle shoulder high and at last, we see the right shoulder high.

basically, this pattern is the technical indicator. as I mention above this pattern has three peaks. with the help of these peaks, we can identify the trend and reversals and bullish or bearish market formation. the outer two peaks are close in height and the main peak of the middle peak is the highest peak.

See in the chart:

Illustration of head & shoulder

from the above image, you have clearly seen the three curves which are left, middle, and right. these curves are the head and shoulders. the left curve is the highest point at this price. this left curve indicates the upward movement of price. another curve which is the middle curve it is showing the highest or we can say that the top of this pattern. and in the last, we have seen the right shoulder which is equal to the left shoulder. this shoulder indicates the lower the trend reversal starts.

What is the importance of volume in these patterns?

Illustration of head & shoulder

yes, the importance of head and shoulder is very essential for both the buyer and seller. before telling about the importance of keeping in mind the head and shoulder pattern is also working when you inverse this pattern. so, let's discuss the importance if the left shoulder peak is higher so, it identifies the investor takes an interest in the market. investor invest the huge volume so, in the result, the market shows the bullish candles. after this left shoulder, the market moves into the middle shoulder and makes the higher highs.

These higher highs in the middle shoulder or head indicate the heavy volume investments in the market. after the head, the market will be moved on to the right shoulder in this shoulder you see the bearish trend will start this trend indicates the volume of the market is decreasing. so, this is the importance of head and shoulders pattern.

2. What is the psychology of market in Head and Shoulder pattern and in Inverse Head and Shoulder pattern (Screenshot needed)

this question has a two-part first one is head and shoulder pattern and the second is an inverse head and shoulder pattern.
so, let's go through it one by one.


Head & shoulder:

I have already mentioned the component of head and shoulder patterns like right shoulder, head, and left shoulder. these three components indicate the up and trend of the market but now I have discussed more deeply.

Illustration of head & shoulder

In the above chart, you see the new terminology which is the neckline and this is the physiology behind it. this neckline shows the behaviour of the seller and it shows the involvement of the seller because the seller wants to drag the price in the downward direction in a left shoulder case. after all of this also right shoulder price is remain downward and break the neckline.

Inverse head and Shoulder


This inverse pattern is formed by the bearish trend reversals. the reason for that is the end of the bearish market and now t is turned of Bullish market. from the below image you clearly see the starting of a bullish market.

Illustration of head & shoulder


from the above image, you clearly see both two shoulders and head. these heads and shoulders I previously mentioned. so, now I explain the physiology of the neckline in the inverse pattern. In the inverse trading pattern, the buyer role is very important because the buyer tends to move the price in an upward direction to take its profit. this is the perfect time to enter the market. so, that the price level is going above the neckline.

Explain 1 demo trade for Head and Shoulder and 1 demo trade for Inverse Head and shoulder pattern. Explain proper trading strategy in both patterns seperately. Explain how you identified different levels in the trades in each pattern(Screenshot needed and you can use previous price charts in this question)

Demo trade for head and shoulder

The first case which is the head and shoulder pattern. first, you need to identify the following points:

1. very first thing which is very important to identify is the left shoulder, head and right shoulder so, you need to be clear yourself first and then move it to the next step.

2. second thing is drawing the neckline to draw the neckline you need the perfect head and shoulder pattern. if the pattern is correct so you draw the low of left with the head of the right shoulder.

3. In the third you need to wait because patience is very important. so, you need to patience with the price to break the neckline.

Illustration of head & shoulder


from the above screenshot, you have seen that I draw first shoulders and head after drawing this I draw the neckline. after drawing both of these things I will additionally draw the stop loss. and entry point because both of these things will be able to provide you with the best entry point in the market and you will clearly see that the entry-level is below the neckline.

Demo trade for Inverse head and shoulder

The second case is inverse head and shoulder pattern. there is the following point which you will need to follow:

1. very first thing which is very important to identify is the left shoulder, head, and right shoulder in inverse order. so, you need to be clear yourself first and then move it to the next step.

2. second thing is drawing the neckline to draw the neckline you need the perfect head and shoulder pattern. if the pattern is correct so you draw the low of right with the head of the left shoulder.

3. In the third you need to wait because patience is very important. so, you need to patience with the price to break the neckline. so, can sell your trade.

Illustration of head & shoulder

in the screenshot, all other things are the same like head and shoulder neckline. but now in this scenario, I have mentioned the inverse of it. additionally, I draw the target are which show to take the sell trade if the neckline breaks. this is how the demo trading of inverse head and shoulder.

4. Place 1 real trade for Head and Shoulder(atleast $10) OR 1 trade for Inverse Head and Shoulder pattern(atleast $10) in your verified exchange account. Explain proper trading strategy and provide screenshots of price chart at the entry and at the end of trade also provide screenshot of trade details.(Screenshot needed.)

In this question, I have selected the token which is Reef in the pair of usdt. first I have to perform the head and shoulder pattern and then take an investment in it. the type of trade which I was done is spot trading in Binance verify account. see in the screenshot so then you will clearly identify it.

Illustration of head & shoulder

In the above screenshot, I have clearly identified the entry-level so, I have to go to my Binance account and invest some money in it.

Conclusion:

Head and shoulder and inverse head and shoulder pattern very helpful full for traders. the reason was that it is very easy to understand and really handy to use it. the reason why I am saying that this strategy is very helpful is that because I am also a newbie trader and before that article I do not know about the working of this strategy. so, in the end, I am very thankful to prof. @utsavsaxena11. that gives us valuable knowledge all us.

so, that's the end of my post I hope you like it.

Regards:

@hammadahmed112