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what is "head and shoulders"

this is a common technical chart pattern used by traders to identify potential trend reversals. It is a bearish pattern that usually occurs after an uptrend.

The pattern consists of three peaks: a higher peak in the middle (the "head") flanked by two lower peaks (the "shoulders"). The line connecting the lowest points of the shoulders is called the "neckline." When the price breaks below the neckline, it signals a potential downtrend and is considered a sell signal.

Let's consider an example using Bitcoin:

An uptrend is observed in the Bitcoin price.
A higher peak is formed (the "head").
The price retraces and forms two lower peaks on each side (the "shoulders").
The neckline is drawn by connecting the lowest points of the shoulders.
If the Bitcoin price breaks below the neckline, it signals a potential trend reversal, and traders might consider selling or shorting the asset.