Head and Shoulders
Also known as: H&S, Head & Shoulders Top
Classic top reversal: three peaks, the middle one (head) higher than the two outer ones (shoulders). A break of the neckline turns the uptrend down.
How it forms
After an uptrend, a first peak forms (left shoulder), a higher peak (head) and a third peak of similar height to the first (right shoulder). The lows between them define the neckline. Volume typically declines toward the head.
How it is typically traded
On a confirmed break below the neckline (close beneath it), often with rising volume. Conservatively: wait for a retest of the neckline from below.
The distance from the head to the neckline, projected downward from the breakout point.
Above the right shoulder (or above the neckline after a retest).
Where & when – and the limits
Most meaningful at the end of a clear uptrend and on higher timeframes. Without a neckline break it is not a signal – a mere triple top is not enough. False breaks happen; wait for confirmation.
Related patterns
Education, not investment advice. Chart patterns describe probabilities, not guarantees – they fail regularly. Always manage risk with stop-loss and position size.
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