2.5.2.1.2.1. Bearish Patterns
Head and shoulders. This pattern shows a small peak (shoulder), followed by a large peak (head), followed by a small peak again (shoulder). When the second peak occurs, this signals that the price is about to drop rapidly and that it would be a good time to sell. After the completion of the head and shoulder pattern, the stock is expected to fall below its support level and continue to fall. A head and shoulders pattern predicts a downward trend in the stock’s price.
Double top. This price formation resembles