I've noticed that many beginner traders overlook one of the most reliable patterns — the head and shoulders. Although in reality, this is one of the most predictable formations on the chart if you know what to look for.

The pattern structure is quite simple, but that doesn't make it any less effective. First, after an uptrend, the left shoulder forms — a local maximum. Then the price rises higher, creating the head, which is the highest point of the entire formation. Next comes the right shoulder, which usually ends up roughly at the level of the left shoulder or slightly below. All of this is connected by a neckline — which can be either horizontal or slightly inclined, depending on the specific situation.

Here's how I see it in practice: the head and shoulders appear only in bullish trends. This is no coincidence. You should look at rising assets; this pattern will be most clear there. I look for three distinct highs and two lows along the neckline. Volume also speaks volumes here — it usually decreases during the formation of the right shoulder but spikes sharply at the breakout.

In trading, everything gets interesting at the breakout. When the price breaks below the neckline, it’s a signal to open a short position. Many traders enter a trade exactly at this moment. It’s best to place the stop-loss slightly above the right shoulder — this will protect against false breakouts, which sometimes happen.

For the target price, there’s a simple method: measure the distance from the top of the head to the neckline, then project this distance downward from the breakout point. It provides a fairly accurate target.

My advice — don’t rush to enter. Wait for a clear breakout and confirmation with volume. The head and shoulders is a reliable pattern, but only if you read it correctly. Always remember risk management and don’t risk more than you’re willing to lose. On BTC, this pattern can be observed regularly if you know where to look.