On the charts: Understanding the Head and Shoulders pattern

The pattern consists of a shape that have three peaks which are categorised into the left shoulder, head and the right shoulder.

A head and shoulder pattern indicates bullish to bearish trend or vice-versa. In simple words, this trend depicts change from positive to negative. 

The pattern consists of a shape that have three peaks that are categorised into the left shoulder, head and the right shoulder. The left shoulder is formed at the end of a sharp up move on high volumes. After the peak of the left shoulder is formed, there is a subsequent reaction and prices slide on low volume. The right shoulder is formed when prices move up again but remain below the central peak called the 'head'