Chart Patterns: The Head And Shoulders Pattern
Head and Shoulders Pattern The head and shoulders pattern is a technical analysis chart pattern that signals a potential trend reversal from bullish to bearish. It is formed by three peaks, with the middle peak (the head) being the highest and the other two peaks (the shoulders) being lower and roughly equal in height. The pattern is completed when the price breaks below the neckline, which is a support level that connects the lows of the two shoulders the Head and Shoulders Pattern The head and shoulders pattern is formed by three peaks, where the outside two are close in height, and the middle is highest. The left shoulder forms when the stock price rises to a new high, followed by a pullback. The head develops when the stock creates another new high before retreating again. Finally, the right shoulder is when the stock forms another new high close to the level of the first shoulder before dropping back. A "neckline" is drawn by connecting the lowest points of the two trou...