⁣The Head and Shoulders pattern is one of the most well-known reversal patterns and is often considered the “king of reversal patterns.” It signals a change from a bullish trend to a bearish trend (Head and Shoulders) or from a bearish trend to a bullish trend (Inverse Head and Shoulders). Head and Shoulders (Bearish Reversal): This pattern consists of three peaks: the first shoulder (smaller peak), the head (the highest peak), and the second shoulder (another smaller peak). A break below the neckline (the support level connecting the troughs between the shoulders) signals a bearish reversal. Inverse Head and Shoulders (Bullish Reversal): This is the opposite of the Head and Shoulders pattern and occurs after a downtrend. It consists of three troughs: the first shoulder (smaller trough), the head (the lowest trough), and the second shoulder (another smaller trough). A break above the neckline (the resistance level connecting the peaks between the shoulders) signals a bullish reversal. Key Point: The Head and Shoulders pattern is considered a powerful reversal signal, but it is important to wait for confirmation (break of the neckline) before acting on it. Example: After a strong uptrend, a Head and Shoulders pattern signals that the bullish trend may be reversing, and the price is likely to head lower. On the other hand, an Inverse Head and Shoulders pattern suggests that after a downtrend, the price is likely to reverse and move upwards.