How to spot a Head and Shoulders
- Forms after an uptrend
- Left shoulder, then a higher peak (head), then a lower peak (right shoulder)
- A neckline joins the two lows between the peaks
- The pattern completes when price closes below the neckline
What the Head and Shoulders tells you
The head is the last higher high. When the right shoulder fails to reach that height, buyers are clearly weakening. The break of the neckline confirms that the uptrend structure has broken.
How traders use it
- Enter short on a close below the neckline, or on a retest of the neckline from below
- Place the stop above the right shoulder
- A common target is the height from head to neckline, projected down from the breakout
- Risk only a small, fixed part of your account on the trade.
Common mistakes
- Shorting before the neckline breaks
- Forcing the pattern onto random peaks
- Ignoring volume on the breakdown
See it on a real chart · EP 04Market Structure: HH, HL, LH and LLWatch the free lesson →
Questions about the Head and Shoulders
Is head and shoulders bullish or bearish?
The regular head and shoulders is bearish and signals a possible end of an uptrend. The inverse version is bullish.
How do you calculate the head and shoulders target?
Measure the distance from the top of the head to the neckline, then project it down from the point where price breaks the neckline. Treat it as a guide, not a guarantee.
For education only, not financial advice. The chart is an illustration of the pattern, not real market data. No pattern works every time; always use a stop-loss.