Invest.operatorkita.com – Play Quasimodo Cash coupon with HSBC Broker. Quasimodo’s pattern is often likened to a head and shoulders. Here is the basic concept of Quasimodo pattern and its difference with Head and Shoulders according to HSB broker.
Have you seen the movie “The Hunchback Of Notre Dame” about Quasimodo? If it is, then you should know that it has a slightly different shape, that is, one shoulder is higher than the other.
Similar to his character, Quasimodo’s pattern has a low left shoulder, followed by a higher high, and then the next low lower than the previous one.
Indeed, the two patterns look similar, but differ in their formation and entry or exit points. Well, if you are still confused by the difference, one of the best local brokers that is HSB has provided a complete explanation of the Quasimodo pattern for you.
A Quasimodo pattern, also known as an Over and Under pattern, is a type of price pattern in which a series of high/low levels appear accompanied by a higher high or lower low.
HSB brokers say that this pattern can be either a sell signal or a buy signal, depending on whether its appearance on the chart has met the requirements for forming a price pattern.
But because the Quasimodo pattern is one of the new patterns and is still not widely known, it is not surprising that this pattern is often equated with the head and Shoulder pattern.
Yes, both are indeed trend reversal patterns or trend reversals that form when there is a slowdown in momentum in a trend and the potential start of a new trend. What is the difference between the Quasimodo pattern and the head and shoulders pattern?
Difference between Quasimodo and Head and Shoulders
The most obvious difference between the two patterns is their formation. HSB brokers say that the easiest way to tell them apart is to draw a line called a neckline, through two valleys in a bearish formation or two peaks in a bullish formation.
If the neckline forms a perfect horizontal line, it is the head and shoulders. If it tilts, it is Quasimodo’s pattern.
Entry and exit points
The entry and exit points for the Quasimodo pattern and the Head and Shoulders pattern can be different, depending on each trader’s specific settings and strategies. However, here are some general guidelines for entry and exit points for both patterns.
When trading bearish Quasimodo, you should sell on the right shoulder. As for the head and shoulders, we recommend waiting for the price to break below the neckline after the right shoulder.
In the Bullish Quasimodo pattern, you can enter trading in the third valley (right shoulder). However, when trading with a Bullish Head and Shoulders pattern, the general rule is to enter the market not on the second shoulder, but after the price breaks above the neckline.
The Quasimodo pattern does not have a neckline like the head and Shoulder pattern. Neckline is a term on the head and Shoulder pattern in the form of a line that connects the lowest point of both shoulders.
Stop loss and take profit levels
For a Bearish head and shoulders, the Take Profit target is equal to the distance between the head and the neckline. The Stop Loss Level can be placed slightly above the third peak or according to the risk and reward ratio.
In the Bullish Head and Shoulders pattern, the profit target is equal to the distance between the head and the neckline. The stop-loss Level can be set slightly below the bottom third or according to the risk and reward ratio.
The Head and Shoulders pattern is considered more reliable if confirmed with a break below the neckline, while the Quasimodo pattern can be confirmed with a break below the right shoulder.
The head and Shoulder pattern is often accompanied by an increase in volume during the formation of the right shoulder, which confirms the reversal. As for the Quasimodo pattern, it is not necessary to have high volumes as confirmation.
The Head and Shoulders pattern has a more definite price target, which is calculated by reducing the distance between the head and neckline of the breakout point. Meanwhile, the Quasimodo pattern does not have a specific price target.
The Head and Shoulders pattern is more commonly seen on long-term charts, such as daily or weekly time frames, while the Quasimodo pattern can appear on any time frame.