The head and shoulders is one of the best-known reversal patterns in technical analysis. It suggests that an uptrend may be turning into a downtrend. Its mirror image, the inverse head and shoulders, suggests a downtrend may be turning up. Both appear on stock, crypto and forex charts.
Head and shoulders (bearish)
- Left shoulder: a peak, then a pullback.
- Head: a higher peak, then another pullback.
- Right shoulder: a lower peak, roughly level with the left shoulder.
- Neckline: a line drawn through the lows between the peaks.
The pattern is generally considered complete when price closes below the neckline. The failure to make a new high on the right shoulder shows buyers losing strength.
Inverse head and shoulders (bullish)
The upside-down version after a downtrend: a low (left shoulder), a lower low (head), and a higher low (right shoulder). A close above the neckline is the key event.
What beginners should know
- The pattern needs an existing trend to reverse.
- Necklines can slope; they are not always horizontal.
- Price sometimes returns to test the broken neckline before moving on.
- Many patterns that look like head and shoulders never complete, so traders wait for confirmation.
Related: double top and double bottom, other reversal patterns and our chart patterns guide.
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This article is for education only and is not investment advice. Trading shares, cryptocurrencies, forex and other markets involves risk, including the loss of capital.