Inverted Head-and-Shoulders on Hourly Chart of CAD/JPY

Normally, I do not look for chart patterns on timeframes lower than H4. But this inverted head-and-shoulders on CAD/JPY @ H1 just asks for a buy stop order. The pattern is only two days old. Its head was formed yesterday while the right shoulder is based on today’s early trading session. The price is fluctuating not far below the neckline — the whole formation is ready for a breakout.
The chart below shows the neckline and the bottom of the head marked with the dashed yellow lines. The same small lines of a smaller size mark both shoulders. The cyan line is my breakout entry point based on 10% of the pattern’s height as measured from the neckline to the head. The green line will be my take-profit level — it is based on 100% of the same distance. I will use the breakout bar’s low to set my stop-loss in this case. The bearish breakouts will be ignored as the inverted head-and-shoulders is a reversal pattern following a downtrend. You can click on the image to see the full-sized chart:

The chart was built using the ChannelPattern script. You can download my MetaTrader 4 chart template for this CAD/JPY pattern. It can be traded using my free Chart Pattern Helper EA.
Update 2015-09-28 7:00 GMT: I have cancelled my pending order as the chart no longer represents a proper form of the inverted head-and-shoulders pattern:

If you have any questions or comments regarding this inverted head-and-shoulders on CAD/JPY chart, please feel free to submit them via the form below.

Leave a Reply

Your email address will not be published. Required fields are marked *