Technical Analysis 101: The Head and Shoulders Pattern

There are still traders that refuse to subscribe to technical analysis.

But after 20 years of using it, I can tell you from experience, it works beautifully. 

In fact, it’s an important tool because it chronicles price trends. 

By being away of those trends, you can better react to market changes and better manage your risk.  It can also help you time your trade.  And, if you can successfully time your trade, you become more disciplined and successful as a trader.

To date, we’ve spoken about many of the popularly used technical tools.

However, there is one that we haven’t spoken about much.  That’s the H&S pattern (or the head and shoulders pattern) – which derives its name from the picture it paints on a chart. They’re typically found after an uptrend.  And its completion – full shoulders and head – can mark the potential for a trend reversal.

The pattern consists of three peaks.


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The middle peak is the head, which is the highest peak.  To the left and right of that peak are the two smaller peaks, which form the shoulders.  The lows of each peak can then be connected to form what’s known as the neckline, or the support line.

There are still traders that refuse to subscribe to technical analysis.

But after 20 years of using it, I can tell you from experience, it works beautifully. 

In fact, it’s an important tool because it chronicles price trends. 

By being away of those trends, you can better react to market changes and better manage your risk.  It can also help you time your trade.  And, if you can successfully time your trade, you become more disciplined and successful as a trader.

To date, we’ve spoken about many of the popularly used technical tools.

However, there is one that we haven’t spoken about much.  That’s the H&S pattern (or the head and shoulders pattern) – which derives its name from the picture it paints on a chart. They’re typically found after an uptrend.  And its completion – full shoulders and head – can mark the potential for a trend reversal.

The pattern consists of three peaks.

The middle peak is the head, which is the highest peak.  To the left and right of that peak are the two smaller peaks, which form the shoulders.  The lows of each peak can then be connected to form what’s known as the neckline, or the support line.


Learn the Best Chart Patterns from Veteran Traders. Apply What
You've Learned and Get Paid To Trade! Learn How Here