Head and shoulders pattern is most applicable to short positions (those are the positions where profits arise when there is a fall on the price). After it has three peaks, the price falls and that is textbook example of good opportunity.
When there is first bottom it means, that there has been decline in demand and to the formation of lower prices, which represents a buying opportunity for those investors who estimate that the price is too low and start shopping. This is followed by an increase in demand and design summit, which is smaller than the previous one. Finally, the price drops even lower.
Head and shoulders pattern
You can draw head and shoulders pattern by drawing a trend line, called the neckline, connecting the bottom on the right and on the left side of the highest peak (the head).
Using a pattern of head and shoulders
Create a short position as soon as the price begins to fall from the direction of the right shoulder and breakthrough down the line.
Determine the level of exit positions
Specify the exit level by using the value of the entry and subtract it with the height of the pattern.