Head and Shoulders Pattern | Coreto.io
Head and Shoulders Pattern | Coreto.io

The head and shoulders pattern is a chart formation that appears as a baseline with three peaks: the outside two are close in height and the middle one which is highest.

In technical analysis, a head and shoulders pattern is used to predict a trend reversal from bullish to bearish.

When the head and shoulders occurs, the pattern starts with the price rising and then pulling back, thus forming the left shoulder. After the price rallies for a second time, it creates a higher peak, which is known as the the head. Afterwards, the price pulls back again, and then rallies into a lower peak, forming the right shoulder.

Head and Shoulders Pattern
Head and Shoulders Pattern
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