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KING’S CROWN, HEAD & SHOULDERS, 1-2-3
TOPS/BOTTOMS
King’s Crown, Head & Shoulders, and 1-2-3 Tops/Bottoms are all
different names for basically the same thing. I’ve even heard the
referred to as “Mountain Peaks/Valleys”. I’m sure some people
have other names for the same thing. I like to call them King’s
Crown (as do many other folks), or Crown for short, but if you hear
someone using a different term you’ll know what they are talking
about. From the diagram below you can see why this has been
called by the other names.forex sato
So what is a “Crown”? A Crown is simply a price pattern that often
presents itself when a trend is broken. In an up trend that is broken
you will often see something like the following diagram (just flip it
upside down and you’ll see what it looks like from a broken down
trend).

In a nutshell, you spot a crown when peak 2 is the highest, and the
low between peaks 2 & 3 has crossed the trend line and usually has
taken out the low from between 1 & 2. Often, but not always, peak
3 bounces off the reverse side of the trend line and has ideally made
a 62% retracement of the swing from peak 2.
On larger Crowns (as seen on Hourly charts) many traders try to
enter at the peak of 3, and you could certainly look for waves to surf
after this point has been established.
On small Crowns (as you might see on your micro trends) you might
look for a suitable wave to surf after peak 3 has been established.
Remember, when trading micro trends you might see this type of a
crown just as a Fibonacci swing is beginning a retracement. Read
the strategies I’ve written about trading Fibs earlier.forex sato
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