Head and Shoulders (and Inverse)

A three-peak reversal pattern: left shoulder, head (the highest peak), right shoulder, with a neckline connecting the two lows in between.

Head and shoulders (bearish reversal)

• Forms at the end of an uptrend.
• Trigger: a close below the neckline.
• Stop: above the right shoulder.
• Target: the distance from the head to the neckline, projected down from the breakout point.

Inverse head and shoulders

The upside-down version at the end of a downtrend: a signal of a potential bullish reversal when the neckline is broken to the upside.

Notes

The neckline is often not perfectly flat — it can slope. A retest of the neckline after the breakout is common.

Key points

• The head must clearly stand out compared with both shoulders.
• Without a break of the neckline, the pattern is not yet active.