How to trade the head and shoulders pattern?

The head and shoulders pattern is a reversal chart pattern that forms part of price action. Although it might not be easily identifiable, most technical traders find it helpful and effective for predicting potential future price movements.

For traders who mainly focus on trading with the trend, this pattern could assist in identifying possible exit points for their positions once the overall trend starts coming to an end. On the other hand, reversal traders could use this pattern to help them look for possible entry points once the pattern has been confirmed.

In this article, we’ll cover the head-and-shoulders pattern in detail, discussing certain aspects such as what it indicates regarding price movements, what an inverse head and shoulders pattern is, and some advantages and disadvantages.