Head and Shoulders Pattern: How to Profit from This Reversal Signal

Have you ever seen that pattern on the chart that literally looks like a head and shoulders? Well, this is one of the most reliable signals that the crypto market offers to predict trend changes.

The Structure is Simple

The pattern has three peaks: the first shoulder (left) rises, then the head rises even higher, and finally the second shoulder (right) is lower than the head, but similar to the first shoulder.

What really matters is the neck - the line that connects both shoulders from below. When the price breaks this line downwards with strong volume, the pattern is confirmed.

How to Operate

Safe approach: Wait for the neck break to actually happen, then enter the sell. Place the stop-loss above the right shoulder.

Aggressive approach: Enter before the breakout if you see the right signals (volume dropping, weak price). But then the risk is higher - the pattern doesn't always work.

The Detail That Makes a Difference

Observe the volume:

• Should drop from the first shoulder to the head
• Then it increases when it forms the second shoulder
• Explodes when breaking the neck

No volume? Suspect the pattern.

This is one of the oldest patterns that traders use, it works for both stocks and crypto. Now that you know how to identify it, it becomes easy to profit when the market wants to reverse.