The neckline is the signal, not the head

Most people call a head and shoulders at the right shoulder. That’s too early.

The shape tells you buyers are losing momentum: the head was the last higher high, and the right shoulder failed to reach it. But a lower high on its own changes nothing. Plenty of right shoulders turn into a continuation of the uptrend.

What actually matters is the neckline, the line through the two pullback lows. That’s where dip-buyers stepped in twice. When a candle closes below it, those buyers are holding losses, and some of them sell. That extra supply is why clean neckline breaks can move quickly.

So the checklist is short:

• A clear uptrend before the pattern.
• Three peaks, the middle one highest.
• A candle close below the neckline, not just a wick, ideally on higher volume.

And the part most posts skip: what proves it wrong. If price climbs back above the right shoulder, the lower-high structure is gone. The pattern has failed, whatever it looked like a day earlier.

Step through it on an interactive chart: Head and shoulders lesson →

Then test your eye. The trainer’s daily challenge cuts five charts off mid-pattern and asks you to call them: Play today’s challenge →

— Crypto Tactics