Similar to the double top, the head and shoulders pattern is another popular pattern that traditionally signals a bearish reversal. The pattern tells that three attempts to break toward the upside have failed, the middle attempt (the head) having the strongest momentum. The trick in trading this pattern is to wait until the “neckline” has been violated. Often price will rise to meet the neckline one last time before declining. Very important is to remember that patterns are not often “clean” and can also have irregular shapes. Nevertheless, once price broke below the neckline of the last shoulder, the pattern performed as traditionally expected.
