Head and Shoulders Pattern
Original schematic showing the guide's principal visual relationships.
Pattern anatomy
A three-peak reversal structure in which the middle peak is highest and the neckline defines confirmation.
Left shoulder → higher head → right shoulder; confirmation requires a close below the neckline.
How it works
Identify the prior trend first, mark repeated swing highs and lows, then draw only the support, resistance, or neckline justified by those pivots. A pattern remains provisional until price closes beyond its confirmation boundary; visual resemblance alone is not enough.
How to read it
The right shoulder shows that buyers failed to regain the head's high. Traders commonly measure the head-to-neckline distance and project it below the break, while treating a move back above the right shoulder as invalidation.
Confirmation checklist
Look for an established prior trend, a completed boundary break, and preferably expanding volume or momentum confirmation. A reversal pattern formed without a trend to reverse is weaker evidence.
Limitations and false signals
Sloping necklines and uneven shoulders are common, so overly precise symmetry creates false identifications. Breaks without participation can quickly reverse.