Glossary
Head and shoulders
A reversal chart pattern of three peaks, the middle one highest, with a neckline whose break completes the pattern.
On this page
A head and shoulders is a chart pattern that may mark the end of an uptrend. It consists of three peaks: a left shoulder, a higher head and a right shoulder at roughly the height of the first. The lows between the peaks are joined by a line called the neckline. A decisive close below the neckline is what completes the pattern; until then it is only a possibility. The upside-down version, an inverse head and shoulders, appears at the end of downtrends.
How it works
The pattern describes buyers losing strength. They push to a new high (the head) but cannot repeat it on the next rally (the right shoulder), and the break of the neckline shows sellers taking control.
Volume is often heaviest on the left shoulder or head and lighter on the right shoulder, which chartists read as fading demand.
What to watch for
- Confirmation matters. Many shapes that look like a head and shoulders never break the neckline, and trading before the break is guessing.
- Necklines slope. A downward-sloping neckline is generally read as weaker for buyers than a rising one.
- Failures happen: a break below the neckline that quickly reverses back above it can trigger a sharp move the other way.
- Subjectivity. Two analysts may draw different shoulders and necklines on the same chart.