Reversal patterns
Head and shoulders
Usually bearish
A head and shoulders is a topping pattern: a peak (the head) flanked by two lower peaks (the shoulders), with the lows between them forming a neckline.
What a head and shoulders tells you
It marks the moment an uptrend stops making higher highs. The right shoulder failing to reach the head is the tell — buyers could not repeat their last effort. The pattern is only complete once price closes below the neckline; until then it is a shape, not a signal to act on.
Why it forms
Each rally attracts fewer buyers than the last. The break of the neckline traps the people who bought the right shoulder expecting continuation.
How traders enter it
Traders typically wait for a close below the neckline, then look for a retest of it from underneath. The measured objective is the distance from head to neckline projected down from the break.
How it fails
It fails often in strong trends: price breaks the neckline, then reclaims it within a few candles. A break on shrinking volume that immediately closes back above the neckline is the classic trap.
That last section is the one worth rereading. A pattern is only useful because it comes with a level that proves you wrong — without one you have a shape and a hope.
People also ask
Is a head and shoulders bullish or bearish?
A head and shoulders is usually read as bearish, but only once it confirms. Before the confirming break it is a shape, and shapes fail. Context decides more than the label does.
How do you trade a head and shoulders?
Traders typically wait for a close below the neckline, then look for a retest of it from underneath. The measured objective is the distance from head to neckline projected down from the break.
When does a head and shoulders fail?
It fails often in strong trends: price breaks the neckline, then reclaims it within a few candles. A break on shrinking volume that immediately closes back above the neckline is the classic trap.
Can ChartLens spot a head and shoulders for me?
Yes. Photograph or screenshot any chart and ChartLens names the pattern if it is clearly formed, with a confidence level and whether it is forming, confirmed or failed — and says nothing if it is not there.
Last updated .