the hAnDbook of teChniCAl AnAlysisA trader may initiate an entry in a head and shoulders top formation in any of
the following ways (the reverse applies for inverted head and shoulders formations):
■ (^) Short at a break of the right shoulder’s uptrend line with a stop placed above
the right shoulder or head (see Point 1 in Figure 13.9)
■ (^) Short at the peak of the right shoulder with a stop placed above the right shoul-
der or head, especially when there is a significant resistive confluence comprising
of significant Fibonacci retracement levels, Floor Trader’s Pivot Point levels, and
psychologically important price levels associated with double and triple zeros
■ (^) Short at the right shoulder when it is testing the left shoulder’s resistance level,
with a stop placed above the resistance level or head
■ (^) Short on a valid penetration of the neckline with a stop placed above the neck-
line, right shoulder, or head (see Point 2 in Figure 13.9)
■ (^) Short on a retest of the neckline after a valid penetration with a stop placed
above the neckline, right shoulder, or head (see Point 3 in Figure 13.9)
figUre 13.8 The Minimum One‐to‐One Projected Price Target.
figUre 13.9 The Minimum One‐to‐One Projected Price Target.