I've noticed that many traders underestimate the classic head and shoulders pattern. Meanwhile, it is one of the most reliable reversal signals in an uptrend.

The concept is simple. After a price increase, three consecutive highs form: first the left shoulder, then a higher head, and then the right shoulder, which is usually slightly lower than the head. Between them, minima form that are roughly at the same level — this is the neckline. When the price breaks below this line, a downtrend begins.

How do I use this in trading? I wait until the head and shoulders pattern is fully formed on the chart of an asset that is rising. I check the volume — it usually decreases during the formation of the right shoulder, and when the neckline is broken, it sharply increases. This confirms that the movement is serious.

I enter a position immediately after the neckline is broken downward — I open a short position. I set a stop-loss slightly above the right shoulder to avoid false breakouts. And I determine the target price simply: I take the distance from the top of the head to the neckline and project the same distance downward from the breakout point.

The head and shoulders pattern works not only on crypto but on any assets. The main thing is patience and proper risk management. On Gate, you can effectively implement this strategy, for example, on BTC. Don’t rush, analyze the charts carefully, and the patterns will reveal themselves.