**Head and Shoulders** pattern, which is a well-known **technical analysis** chart pattern used in trading. This pattern signals a potential trend reversal from bullish to bearish. Here's how it works:
1. **Left Shoulder** – The price rises to a peak and then declines.
2. **Head** – The price rises again, forming a higher peak, then declines.
3. **Right Shoulder** – The price rises again but forms a lower peak than the head.
4. **Neckline** – A support level connecting the lows after the left shoulder and head.
### How to Trade It:
- **Entry Point**: Traders often enter a short position when the price breaks below the neckline.
- **Stop-Loss**: Placed above the right shoulder to manage risk.
- **Profit Target**: Measured by the distance between the head and neckline.
