Chart Pattern #1: Head and Shoulders

Definition:

The Head and Shoulders pattern is a classic trend reversal pattern that typically forms at the end of an uptrend. It consists of three peaks:

Left Shoulder: A smaller peak.

Head: The highest peak in the middle.

Right Shoulder: Another smaller peak, similar to the left one.

The line connecting the two low points between the shoulders and head is called the neckline. When the price breaks below the neckline, it signals a potential trend reversal to the downside.

Strategy:

Enter a sell trade when the price breaks below the neckline.

Place a stop-loss above the right shoulder.

Set a take-profit target equal to the distance from the head to the neckline.

Head and Shoulders pattern has recently been observed in Bitcoin ($BTC ).