The mythical head-and-shoulders top pattern opens you up, peels everything apart, crushes it, and feeds it to you!

Many people get stuck on patterns—why does the head-and-shoulders top work? It’s nothing more than the showdown between bulls and bears showing up in the pattern: the third peak is not just lower than the first—it’s even lower than the first peak, which is a sign of a coming big drop! Because the first wave is the bulls overpowering the bears, the second wave has the bulls even more forceful than in the first wave—so they carve out a higher second peak. But the third peak is lower than the first peak (even lower)—this shows the bulls’ strength, relative to their first push up, has decreased. And doesn’t that clearly mean the bulls aren’t doing well? Will there be a big crash?

Any technical, any pattern, is formed through how volume and price evolve—but in the end, it’s still a psychological battle between people.