Reversal Patterns · Bearish
Head and Shoulders
A high, a higher high, and a lower high, then a break of the neckline.
The middle peak is the head. The neckline connects the two dips between the peaks.
This is an example of how traders often plan the pattern. It is not a promise that price will reach the target.
Identification
- The head is higher than both shoulders.
- The right shoulder fails to reach the head.
- Confirmation is a close below the neckline.
Market context
It is usually studied after a rally.
Entry example
An example entry is the neckline break.
Stop-loss example
An example stop is above the right shoulder, or above the head for a wider example.
Target example
A common teaching method projects the head-to-neckline distance downward.
Common mistakes
- Labeling three ordinary peaks a head and shoulders when the middle peak is not the highest.
Candlestick and chart patterns are probabilistic observations, not guaranteed trading signals. This page does not report a win rate.