The Head & Shoulders pattern is a widely recognized bearish reversal pattern that signals a potential shift from an uptrend to a downtrend. It consists of three peaks: the left shoulder, the head (which is the highest peak), and the right shoulder (which is lower than the head but similar in height to the left shoulder). The key element of this pattern is the neckline, which acts as a support level. When the price breaks below the neckline, it confirms the pattern and indicates a potential downtrend.

This pattern forms when buying pressure weakens after a strong bullish trend. The left shoulder appears as a price rise followed by a pullback, the head forms with a higher peak, and the right shoulder signals reduced momentum. The pattern is confirmed when the price breaks the neckline with strong volume, indicating a trend reversal.

Traders use this pattern for shorting opportunities. The ideal entry point is the neckline breakdown, with a stop-loss above the right shoulder to avoid false breakouts. The target price is estimated by measuring the height of the head and projecting it downward from the neckline.