What Causes a Head and Shoulders to Form?

[Elite333]

All price action carries with it a message. Some messages are easier to read than others, but they’re always present.

Concerning the head and shoulders pattern, the message is that buyers are tiring and that you’d best prepare for a potential reversal.

But what is it about the pattern that causes the market to reverse? How can a few simple swing highs accomplish this?

 

[5starfx]

All price action carries with it a message. Some messages are easier to read than others, but they’re always present.

Concerning the head and shoulders pattern, the message is that buyers are tiring and that you’d best prepare for a potential reversal.

But what is it about the pattern that causes the market to reverse? How can a few simple swing highs accomplish this?

Hello bro, head and shoulder pattern is usually cause by supply and demand levels. When institutions and hedge funds wants to open or close a trade they often make use of these levels and then the movement of the price will look like that of a double top/bottom and head/shoulder.

In simple terms, head and shoulder and all other pattern is caused by demand and supply.