Head and Shoulders Pattern
Classic TA pattern signaling trend reversal — three peaks where the middle is highest.
Head and Shoulders is one of the most reliable technical analysis patterns indicating a reversal from uptrend to downtrend.
Structure:
•Left shoulder — high peak
•Head — higher peak (new ATH or local maximum)
•Right shoulder — lower peak (symmetric to left)
•Neckline — support line through troughs between peaks
Signal:
•Break below neckline = confirmed bearish signal
•Target: neckline − head height
Examples:
•BTC H&S September 2021 → drop from $50k to $30k
•ETH H&S March 2018 → multi-month downtrend
Inverted H&S:
•Three troughs where the middle is lowest
•Bullish reversal signal
•Break above neckline = long signal
False breakout:
•Price breaks neckline but returns
•Always wait for candle close below/above neckline
Note: H&S is retrospective — easy to see when complete, harder in real time.