All right everyone. So in this episode, I'm going to walk you through the head and shoulders pattern. This is a multi-candlestick pattern like a bull flag or a flat top breakout, but it generally occurs over a much longer period of time. We will sometimes see it on a one-minute chart, but more of the examples that I'm going to show you today are actually on a five minute time frame where it's a little easier to visualize.

So let's jump right into the charts and a reminder is always that this is, uh, another episode in a multi-part series on technical analysis and how to read stock charts for day trading. So if you haven't checked out some of those other episodes, make sure you subscribe the channel and hopefully the other episodes will be right here in this playlist so you can watch them after this. All right, let's go jump into the charts. So this is your classic head and shoulders pattern and it's not perfect.

They're not all necessarily a perfect uh, head and shoulders image, but the idea here is that this is the arm. This becomes the shoulder. This area becomes kind of the head and then this becomes the other shoulder and then it sells off here. So your your classic head and shoulder pattern.

If we look at this on a on the white board is the stock moves up. It goes sideways. It moves up. It goes sideways.

for a second, it drops down and it comes up and this is where some traders will be like, oh, I should buy it here for the retest of the high and when you start to visualize this pattern, that's what more often happens. However, inverted, You have an inverse head and shoulders and that is where you buy. So I'm going to walk you through both the regular head and shoulders and the inverted head and shoulders because I will trade the inverted head and shoulders for a long off of this level right here. So let's jump back to our charts.

So this is our standard head and shoulders pattern in this example. Again, not picture perfect, but the fact is when it comes back down right here, some traders might be in this area thinking, okay, should I buy this dip We've got a little ascending support here. Maybe it's going to go back up, but what you can realize is that it stairs. It was stair stepping up and up and right here it changes to stair stepping down.

It goes lower than the previous pullback and that's a big red flag and right here it breaks through that support level and then when it tries to come back up, you can now very clearly see the resistance kind of at the shoulder point here and here. As it comes back down, let's look at another example. Maybe this one will be a little bit clearer. So this is also on a five minute time frame.

You can see the shoulder it pulls back here, sort of a deep pullback. It comes back up to the head consolidation and then drops all the way back down. This right here is very bearish that it pulled back. This candles will kind of confirm that it's a head and shoulders pattern because it came back down to this area here this previous resistance level right down and it doesn't even find support There it comes lower.

It's very common that these will sort of be a little bit skewed a little to the left or the right. This kind of almost looks like a ghost. Like like a spooky ghost. You can see how it's kind of got these funny shoulders that's very common as well and it is a very haunting pattern because it never leads to the stock moving up.

It's very bearish when you see it in this context. This is another example of a head and shoulders. and actually let's just go back here. Um gosh, it looks so similar to Atif I thought maybe for instance for a second I had put the same one in twice.

but uh, but no I didn't So here we've got uh, the arm up the shoulder up to the head and then comes back down and this is what's really bearish. It came back to this previous level. So what you want for a stock to be bullish is for it to pull back and then continue higher and then pull back and then continue higher. So if any time it pulls back and then drops down to this previous level.

That's where you're getting the formation of the head and shoulders right up here. this spooky little level right? So that's what is very bearish about a head and shoulders pattern. Now this is an inverted head and shoulders pattern. So right here you have, uh, the shoulder, the pull back here, the head.

Well you could even actually say sorry, this is. this is a little bit funny pattern. So that's the shoulder there, that's the shoulder there and that's where you have the long right here for the break back up over this level up to here. but it almost is a double shoulder shoulder, head and shoulders pattern because you sort of have this second level here that it runs into and then it can't break.

so it's kind of. You know it's a stair-stepping pattern down and then it kind of starts stair-stepping back up, but it's not able to continue and it pulls back again. This is another inverted head and shoulders pattern where you could first actually look at this as a shoulder head, shoulder, back down, head, shoulder, coming back up. so you have the first one right here.

this is the shoulder and the shoulder and that's the head with a little smiley face here and then it turns into at the shoulder they share the same shoulder and then this is the smiley face but upside down of course as it goes back up so see how you have that funny pattern. So if you're able to visualize that sort of flip from a traditional head and shoulders and then to an inverted head shoulders, then you can start to see that opportunity for the move back up. Remember, as always, this is really only valid when you're looking at the right type of stocks to trade. So this particular stock Taop is up 100 in one day.

It has a catalyst, it has a lower float, it's moving quickly. It's one of the leading gainers in the entire market on the day. Therefore, it has a lot of people watching it, and when these patterns start to form, you start to see these very clear buy and sell signals. There's a lot of traders sitting on the sidelines ready to react as soon as they see that pattern forming and that buy signal appearing.

So these will get much better resolution than if you try to trade a head and shoulders pattern. for instance, on a stock that no one is really watching. So I just want to show you a couple of quick examples there of head and shoulders patterns. I have, uh, one more right here.

which is. Um, it's again a little bit of a skewed pattern. You've got kind of a bigger shoulder, sort of the longer head here, another shoulder, and then it breaks here back to the upside. but you could also combine as you see here, ascending support.

maybe a more aggressive ascending support line here. You also have a break of volume weight average price right here and then coming back up to the double top of 14 which is the whole dollar psychological resistance. So you have multiple levels and multiple patterns sort of happening at the same time and that's actually very common. and it's part of multi-time frame alignment that perhaps on a one-minute chart you're seeing one pattern that's bullish and then you're seeing a second pattern that's bullish.

On the larger time frame, the more multi-time frame alignment you have, the stronger your confirmation will be. When it starts to break out to the upside, more eyes will see the pattern. That means more resolution and more volume. So I hope you're enjoying this multi-part episode, multi-part series of technical analysis and how to read stock charts.

If you are, check out the next episode in the series right here or check out one of the most popular ones right there and reminder. As always, if you want to check out my multi, i'm sorry my micro pullback Strategy Pdf that's going to be linked right down below in the description, so make sure you check that out because this is all technical analysis. It's valid, It's important, but you need a strategy to go with it so you can download the micro pullback Pdf strategy that I'm sharing with you guys. and I hope you guys of course, really enjoy it.

All right? You can continue on to the next two episodes.