According to Al Brooks, what kind of pattern is every Head and Shoulders pattern?
It is a major trend reversal.
Why are not all major trend reversals considered Head and Shoulders patterns?
Because not all major trend reversals have a left shoulder.
Most Head and Shoulders reversals are considered minor and typically lead to what market behavior?
They lead to trading ranges rather than an actual reversal of a trend.
A major reversal is defined as a reversal that leads to at least how many bars and legs?
It leads to at least 10 bars and two legs.
What is the approximate probability of achieving a swing trade when entering after a major reversal setup?
There is about a 40% chance of a swing trade.
What is the probability of having a small loss or a small win after a major reversal setup?
There is a 60% chance of a small loss or a small win.
In a bear trend, what is the first reversal up that demonstrates bull strength called in an H&S pattern?
It is called the left shoulder.
In a bear trend, after the left shoulder forms and the trend resumes down, what is the second reversal up called?
It is referred to as the head.
After the head forms and the bear trend tries to resume again, what is the third reversal up called?
It is described as the right shoulder.
A Head and Shoulders bottom pattern can be described as a lower low major trend reversal followed by what?
It is followed by a higher low major trend reversal.
The fewer bars that are in a reversal pattern, the more likely the reversal will be _____.
minor
A minor reversal in a bear trend is likely to lead to either a bear flag or a _____.
trading range
What is the characteristic trade-off of taking the earliest entry on a swing trade setup?
It has low probability but also lower risk and an excellent risk-reward ratio.
What is the characteristic trade-off of waiting for a higher probability trade entry?
Your stop will be further away, the risk-reward ratio will be worse, and less profit remains.
If you take 100 low-probability early entries versus 100 high-probability later entries, how will the total profit likely compare?
The total profit will be about the same due to the math of risk-reward.
Every Head and Shoulders pattern is considered to be what type of market structure?
A trading range.
Every Head and Shoulders bottom is what specific type of major trend reversal?
It is a higher low major trend reversal.
Why are many higher low major trend reversals not also Head and Shoulders bottoms?
Because many higher low major trend reversals do not have a left shoulder.
When traders anticipate a Head and Shoulders bottom, what is the low-probability bet they might take?
They might buy the reversal up from the head.
Traders looking for Head and Shoulders bottoms typically look to buy the reversal up from which part of the pattern?
They look to buy the reversal up from the right shoulder.
Every Head and Shoulders top is what specific type of major trend reversal?
It is a lower high major trend reversal.
When you have a successful major trend reversal, the swing in the new direction technically begins at what point in the pattern?
The swing begins at the head of the pattern.
On a chart, if a Head and Shoulders pattern is still forming within a larger channel, the reversal is likely to be what?
It is probably going to be minor.
For a chance of a major reversal from a bear trend to a bull trend, what evidence do bulls usually need to see first?
They usually need to see a strong breakout, preferably above the bear trend line.
