Excellent 👌
The appearance of the Head and Shoulders pattern on the trading chart is considered one of the most important technical patterns in classical analysis, and it is often a signal of a trend reversal.
📌 Model Explanation:
It consists of 3 peaks:
Left Shoulder (First Peak).
Head (Higher Peak).
Right Shoulder (Peak similar to the first).
There is a line called the Neckline that connects the troughs between these peaks.
📉 Its Significance:
If it appears after an upward trend → it usually indicates the beginning of a downward reversal (potential sell signal).
A break of the price below the neckline with strong trading volume often confirms the decline.
📈 What about the opposite?
There is also an Inverse Head and Shoulders that appears after a downward trend → and is often a signal of an upward reversal (potential buying opportunity).
⚠️ But very important:
The pattern is not always 100% accurate, so it is preferable to confirm it with other indicators (such as RSI, MACD, or trading volume).
