Head & Shoulders
Definition
Three peaks: a higher middle peak (head) between two lower peaks (shoulders).
Psychology
Buyers tried three times; the middle try was strongest, but they failed and sellers took over.
Real-life analogy
💡 Someone climbing a hill three times — the middle climb is highest, then they walk downhill.
Expected direction
down
Entry / Stop / Target
Entry: On a close below the neckline. · Stop: Above the right shoulder. · Target: Head-to-neckline height projected down from the neckline.
Historical behaviour
One of the most reliable reversal patterns when fully formed.
Illustrative success rate
~70% after a confirmed neckline break · High reliability
Common beginner mistakes
- • Calling it before the neckline breaks
- • Ignoring the volume profile
Quick quiz — did you understand?
1. Is the Head & Shoulders generally considered bullish, bearish, or neutral?
2. After a confirmed Head & Shoulders, the expected direction is usually:
3. Which is a common beginner mistake with the Head & Shoulders?
Educational and probability-based analysis only. This is not financial advice and not a prediction of real market outcomes.