Head & Shoulders Pattern Strategy â Powerful Reversal Setup đ
The Head & Shoulders pattern is one of the most reliable reversal patterns in technical analysis. It usually appears after an uptrend and signals a potential trend reversal to the downside. The pattern consists of three peaks: the left shoulder, the head (higher peak), and the right shoulder (similar height to the left). A neckline connects the swing lows between these peaks.
đ How to Trade It: Wait for price to break and close below the neckline with strong volume. This confirms the pattern. Enter a short position after the breakout or on a retest of the neckline. Place your stop loss above the right shoulder. The target is typically measured by calculating the distance from the head to the neckline and projecting it downward.
đ Pro Tips:
Works best on higher timeframes (1H, 4H, Daily).
Volume confirmation increases accuracy.
Avoid trading before neckline breakout.
No pattern guarantees 100% success â always use proper risk management and a clear risk-to-reward ratio.