What is a neckline in technical analysis?
The neckline connects the reaction lows of a head and shoulders pattern, or the reaction highs of an inverse head and shoulders pattern. Technical analysts use necklines to predict when an asset's price has reached a top or bottom.
What is the neckline in the head and shoulders chart?
The neckline is the part of the head and shoulders chart pattern that connects the two reaction lows (topping pattern) or highs (bottoming pattern) to form an area of support or resistance. The head and shoulders chart pattern is commonly used to predict bullish or bearish reversals .
What is head and Shoulders pattern in forex?
Head and Shoulders Pattern in Forex. The Head and Shoulders pattern is a chart figure which has a reversal character. As you might image, the name of the formation comes from the visual characteristic of the pattern – it appears in the form of two shoulders and a head in between. The pattern starts with the creation of a top on the chart.
What is the H&S neckline?
The Head and Shoulders neckline is considered the most important component in trading the H&S pattern. The reason for this is that the H&S neckline acts as the trigger line for trading the pattern. The neckline needs to be manually drawn on your chart.