In my never ending search for high probability trading opportunities, I always look for one perticular pattern above all (aside from the C-Matrix setup ofcourse :-))... The Head & Shoulders pattern.
The secret sauce for high success rate, when it comes to trading the Head & Shoulders pattern, lies with 2 key elements.
The first element is the identification process. Very few traders know this, but the further the tip of the head from the tip of the shoulders, the better the chances for a real reversal.
As a rule of thumb, always try to make sure that the tip of the head is beyhond the point of 123.6% with relation to the left shoulder.
The second element has to do with having a solide exit mechanism in place. For example, I always make sure that my Head & Shoulders pattern is backed up by a well established C-Matrix setup, which helps me to determine a relaiable set of price targets. Check it out on the NZD/CAD earlier this month.
