The head-and-shoulders pattern is one of the more reliable price indicators that technical analysts use. It tends to occur quite often, making it easy for experienced investors to spot. It is also observed in all financial markets, meaning you can use it to trade stocks, commodities, or crypto.
However, that doesn’t mean it’s foolproof. Beginner investors may mistake normal market volatility for a head-and-shoulders pattern, resulting in bad investment decisions. Before making trades, familiarising yourself with general market trends is wise.
Either way, we advise against using chart patterns as the sole basis for an investment decision. While they can be handy tools to have in your investing toolkit, they are no substitute for thorough research and analysis.