#山寨季来了？# The head and shoulders pattern is a common top reversal pattern in the Candlestick Chart, indicating that the rising trend may come to an end, and there is a high probability of a subsequent turn towards a fall. Its shape resembles a person's head and shoulders, and the specific composition and characteristics are as follows:

The composition of the head and shoulders pattern

- Left Shoulder: During the process of price rise, a wave of higher rise occurs followed by a pullback, forming the first peak (Left Shoulder), with the pullback low being A.

- Head: The price rises again, breaking through the left shoulder high point, creating a new higher high (head), and then falling back to a position B close to point A.

- Right Shoulder: The price rises for the third time but fails to break through the head's high point, forming a high point (right shoulder) lower than the head, and then falls again.

- Neckline: The straight line connecting the left shoulder's retracement low point A and the head's retracement low point B, which is an important support level.

Pattern Confirmation and Operating Signals

- When the price falls below the neckline, the head and shoulders pattern is officially confirmed, and this is usually regarded as a sell signal.

- After breaking the neckline, a pullback to the neckline may occur, but if the pullback fails to stay above the neckline, it further confirms the downtrend.

- In terms of volume, the trading volume of the left shoulder and head is relatively large, while the trading volume of the right shoulder usually shrinks. When breaking below the neckline, an increase in trading volume is more convincing.

For example, if a stock continues to rise, it first forms a left shoulder (accompanied by increased volume), then after a pullback it reaches a new high forming the head (with increased volume), after another pullback it rises slightly to form the right shoulder (with decreased volume), and finally breaks below the neckline. At this point, investors may consider selling to avoid subsequent fall risks.