What is a Head and Shoulders?
Head and Shoulders Definition:
In Technical Analysis, a head and shoulders is generally considered as a bearish reversal chart pattern that is found at the end of an uptrend. Here, the price fails to reach the high of the second peak after already marking two consecutive highs. Often, the troughs between the peaks are more or less at the same level. Sometimes, though, the line that connects the two troughs or the “neckline” can either be upward or downward sloping rather than horizontal. In some cases, head and shoulders can also be seen as a bearish continuation pattern that is found within a downtrend. In both instances, a breakdown occurs when the price falls below the pattern’s neckline. A target is then gauged by projecting the height of the head from its neckline from the point of breakout.