Head and Shoulders
BearishReversalBeginnerThree peaks, the middle one highest. Buyers are running out of fuel.
Verdict: CautionBitcoin 4H: 21 trades, won 62%, avg trade +1.3% vs random day —. Backtest
Price is in a strong uptrend. Buyers push it to a peak, then it pulls back. That's the left shoulder.
step 1/7
Trade rules
| Direction | Short (sell) |
|---|---|
| Entry | A candle CLOSE below the neckline, ideally on rising volume. |
| Cancelled if | Price closes back above the right shoulder. |
| Target | Same height, projected from the breakout |
3 common mistakes
- Selling at the right shoulder before the neckline breaks.
- Forcing the pattern: shoulders at wildly different heights.
- Ignoring the trend: it needs a real uptrend before it.
Backtest
same rules every time · equal size · no fees · method| Market | Trades | Won | Avg trade | Random day |
|---|---|---|---|---|
| Bitcoin · 4H · 2017-2026 | 21 | 62% | +1.30% | — |
| US large caps (50) · 1D · 2016-2026 | 116 | 45% | −1.57% | — |
Verdict: CautionWorks in some markets, not in others.
pattern +27%
pattern −183%