JoymistaWhat Is the Head and Shoulders Pattern?
Head and shoulders is a reversal pattern: three peaks with the middle one highest (the head), confirmed when price breaks the neckline joining the two lows.
Explained
It usually appears after a rise, and its inverse after a fall. A common way to estimate a target is to measure from the head’s top to the neckline and project it from the break point. The target is an estimate, not a promise.
Example
Example with made-up numbersThe head tops at 120 and the neckline is at 100, a distance of 20, so the estimated target after the break is 100 − 20 = 80.
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Related terms
- Double Top and Double BottomA double top is a bearish reversal pattern: two similar peaks with a dip between them,…
- Support and ResistanceSupport is a price zone where falls stopped before because buyers took over; resistance…
- BreakoutA breakout is price closing clearly outside a support or resistance zone; a false…
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