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The Three Buddha Top / Head & Shoulders

Updated: Jan 13

1 of 100 lessons in my Common Sense Candlesticks Course. SEE MORE

This is the same thing as a Western Head & Shoulders Top. Interestingly both the East and West came up with the same pattern. Of course there are others also. The Japanese were using this pattern about 200 years before the West "found" it.

This is the same thing as a Western Head & Shoulders Top. Interestingly both the East and West came up with the same pattern. Of course, there are others also.

Below are two charts for you to review. These patterns consist of three “mountains” or highs with the center top being the highest. They can sometimes occur within an uptrend and not just at the top of the uptrend. For obvious reasons, they are stronger if they appear at the top of the trend.

It’s interesting how the Three Buddha Top was named. In Buddhist Temples, there are three main Buddhas. The top Buddha (highest one) is called the centered Buddha and is always higher than the ones on the left or right which they call Saints.

The third Saint should have a lower high than the left Saint to be most effective.

You can see this in the chart below. Following that chart is another chart with a deeper explanation using Western analysis but they should be traded the same way basically.

The following graphic shows this pattern as a Western Head & Shoulders which is how I would suggest you trade it.


#1. The left shoulder (1st Saint) is where the pattern starts. Then prices drop (A) and then rallies to form the Head (The Buddha).

#2. The high fails and a higher low is made (B)

#3. There is once again a smaller rally forming a right shoulder (3rd Saint) and drops again.

#4. A neckline is is similar to a trend line is drawn between point (A) and point (B).

#5. Take the dollar amount (points or ticks) between the Head (Buddha) and the neckline (C). I short the market once price breaks the neckline. You have the option of going short as soon as the neckline is broken or waiting for a close below the neckline before getting short.

#6. I then calculate the exact amount from the high straight down to the neckline. This indicates “about” how much price should fall once it breaks below the neckline. My protective stop would be just above the Right Shoulder (3rd Saint)

#7. My limit order to take profits would be the same amount as the price move to the neckline from the Head (Buddha). In the above graphic that would be $1,000.00 target.

#8. However, before the profit target of $1,000 is hit there is often as pullback to the Neckline (D). I feel this could also be a good place to short the market again with a lower protective stop just above the neckline (D). You could also wait for support (E) to be broken before shorting it again. I would not necessarily anticipate that price will drop really far below my profit target but sometimes it does. Don’t get greedy.

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