Head and Shoulders(HS) is a reversal pattern. HS top indicates that an uptrend is over while HS bottom indicates that downtrend could be over. A HS top is formed when the price makes a high, pulls back , makes a higher high , pulls back then makes a lower high. This creates three peaks with the centre one being the highest. When the price falls below the neckline after the third peak, it is time to create a short position or exit a long position.