The Head and Shoulders ‘Top’ is one of two major head and shoulders chart patterns that forms:
especially after it breaks below the neckline of the pattern.
This pattern occurs after an uptrend and usually marks a major trend reversal when complete.
The Head and Shoulders chart pattern is a heavily used charting pattern, giving easily understood potential buy and sell signals.
The Head and Shoulders
The top formation has four main steps for it to complete itself and signal the reversal – these consist of three successive peaks
A line is drawn as the neckline which forms support from the reaction lows of the left and right shoulders.