Head and shoulders

The pattern consists of three distinct parts: the left shoulder, the head, and the right shoulder.

1. The left shoulder is formed when the price of the asset rises to a certain level, then falls back down.
   

2. The head is formed when the price rises again, this time to a higher level than the left shoulder, before falling back down.
   

3. The right shoulder is formed when the price rises once again, but not as high as the head, before falling back down again.
   

The pattern is complete when the price falls below the support level, which is the level at which the price had previously bounced back up during the formation of the left shoulder and the right shoulder. This indicates that the price has broken through a key support level and is likely to continue to fall.

Traders who use the head and shoulders pattern typically look for the formation of the pattern on a chart and wait for the price to break below the support level before selling the asset. Some traders will also use other technical indicators, such as moving averages or volume, to confirm the pattern.