Head and Shoulders
A three-peak reversal pattern where the middle peak (head) is tallest, flanked by two shorter peaks (shoulders), signalling a trend top.
The Head and Shoulders pattern forms at the end of an uptrend. Price rallies to a high (left shoulder), pulls back, rallies to a higher high (head), pulls back again, then rallies to a lower high (right shoulder) before breaking down.
The neckline — drawn through the two pullback lows — is the confirmation trigger. A close below the neckline completes the pattern. The measured target equals the distance from the head to the neckline, projected downward from the breakout point.
- Volume typically declines from left shoulder to head to right shoulder.
- A throwback to the neckline after the break is common.
Example
AAPL grinds up to $185 (left shoulder), dips to $178, spikes to $193 (head), pulls back to $179, then rallies weakly to $183 (right shoulder). The neckline sits near $179. Price closes below $179 on heavy volume — short trigger, target ~$165.
Related Terms
Diamond Pattern
A broadening formation that then contracts into a symmetrical triangle, creating a diamond shape — a rare but reliable reversal pattern.
AdvancedDouble Top
Two consecutive peaks at roughly the same price level, separated by a pullback, signalling exhaustion and potential trend reversal downward.
BeginnerInverse Head and Shoulders
A three-trough reversal pattern at a downtrend bottom: the middle trough is deepest, flanked by two shallower troughs, signalling a trend floor.
BeginnerNeckline
The support or resistance level connecting the lows (or highs) of a reversal pattern — the line whose break confirms the pattern.
BeginnerReversal Pattern
Any pattern that signals a change in the prevailing trend direction — Head and Shoulders, Double Tops/Bottoms, and wedges at extremes are classic examples.
BeginnerThrowback
A post-breakout pullback to the broken resistance level, which now acts as new support — a common re-entry opportunity in trending markets.
BeginnerTriple Top
Three failed tests of the same resistance level, indicating sellers are firmly in control and a bearish breakdown is likely.
Beginner