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Head And Shoulders Pattern

What Is a Head And Shoulders Pattern?

A head and shoulders pattern is a chart formation that appears as a baseline with three peaks, the outside two are close in height and the middle is highest. In technical analysis, a head and shoulders pattern describes a specific chart formation that predicts a bullish-to-bearish trend reversal.


The head and shoulders pattern is believed to be one of the most reliable trend reversal patterns. It is one of several top patterns that signal, with varying degrees of accuracy, that an upward trend is nearing its end.


KEY TAKEAWAYS

  • A head and shoulders pattern is a technical indicator with a chart pattern described by three peaks, the outside two are close in height and the middle is highest.

  • A head and shoulders pattern describes a specific chart formation that predicts a bullish-to-bearish trend reversal.

  • The head and shoulders pattern is believed to be one of the most reliable trend reversal patterns.

What Does A Head And Shoulders Pattern Tell You?

A head and shoulders pattern is comprised of three component parts: