Common Chart Patterns: Head & Shoulders, Double Top/Bottom

A head and shoulders pattern forms from three peaks — a higher middle peak (the "head") flanked by two lower peaks (the "shoulders") — and is traditionally read as a signal that an uptrend may be reversing into a downtrend.

A double top forms when price reaches a similar high twice with a pullback in between, suggesting resistance is holding firm. A double bottom is the mirror image at a support level, often read as a sign that selling pressure is running out.

These patterns describe crowd behavior — the same emotional cycle of buying, hesitation, and selling tends to repeat in a recognizable shape. They're most useful as one piece of a bigger picture, alongside support/resistance and momentum, rather than a signal to act on by itself.