Nifty 50 4h time frame

The Head and Shoulders pattern is a widely recognized chart formation in technical analysis that signals a potential trend reversal1
. Here's a detailed description:

Formation
The pattern consists of three peaks:

Left Shoulder: The first peak, which is relatively high.

Head: The second peak, which is the highest among the three.

Right Shoulder: The third peak, which is lower than the head and similar to the left shoulder.

Interpretation
Bullish-to-Bearish Reversal: The classic Head and Shoulders pattern indicates a potential reversal from an upward trend to a downward trend2
.

Inverse Head and Shoulders: This pattern signals a potential reversal from a downward trend to an upward trend3
.

Key Levels
Neckline: The support level formed by the lows of the two valleys between the peaks. A break below this neckline confirms the pattern and signals a bearish reversal2
.

Volume: Increased volume during the formation of the head and the breakout below the neckline adds credibility to the pattern.

Trading Strategy
Entry: Enter a short position when the price breaks below the neckline with high volume.

Stop Loss: Place a stop loss above the neckline to limit potential losses if the pattern fails.

Target: Measure the distance from the head to the neckline and project it downward from the breakout point to estimate a price target.