This post is purely for education purpose to depict one of the most well known chart pattern, head & shoulders (H&S) in action.
Weekly chart of Tesla shows a textbook H&S formation which broken down from neckline during end of October this year. As per classic TA (technical analysis), we measure the height of head from the neckline and that gives us potential target. In this case, the size gives the target of around 105. It’s now trading at around 139 (neckline breakdown was around 220).
Getting into a trade at such a late stage should be avoided and the best time to get into such trades is when neckline breaks with a close below or above it (depending on it’s regular or inverted). That offers a great risk reward.
Purpose of this post is just to educate on H&S pattern and how to trade it from education perspective only.
