Head & Shoulders Bottom and Top

The Head & Shoulders patterns are one of the major price patterns.

Head & Shoulders Bottom

• Bullish reversal pattern
• Appears at the end of a downtrend
• Consists of 3 defined troughs
• Middle trough is the head
• Left and right troughs are the shoulders and should be almost equal price
• Neckline can be flat or have an upward or downward slope
• Neckline provides resistance
• Volume is lighter at each trough and expands at the breakout of the neckline
• Projected price target: height of the pattern (measure from the head to the neckline)

Head & Shoulders Top

• Bearish reversal pattern
• Appears at the end of an uptrend
• Consists of 3 defined peaks
• Middle peak is the head
• Left and right peaks are the shoulders and should be almost equal price
• Neckline can be flat or have an upward or downward slope
• Neckline provides support
• Volume is lighter at each peak and expands at the breakout of the neckline
• Projected price target: height of the pattern (measure from the head to the neckline)