Head and Shoulders

A Head and Shoulders is a chart pattern that looks like a person's head flanked by two shoulders—three peaks where the middle one is tallest. Traders watch for this pattern because it often signals a stock price is about to drop after climbing. You'll see it on price charts when you're analyzing a stock's historical movement. The pattern forms when a stock rises to a peak (left shoulder), climbs even higher (head), falls back down, rises again but not as high (right shoulder), then breaks below the lowest point between these peaks. Think of it this way: if TechCorp stock showed this pattern after a big run-up, many traders would bet the price would keep falling. It's not a guarantee, but it's a popular signal that suggests momentum is shifting downward.