Head and Shoulders
The pattern resembles a human head with two shoulders on either side. Understanding the basic characteristics of the Head and Shoulders pattern is essential for traders looking to identify potential trading opportunities.
Basic chart
Formed after an uptrend and indicates a possible shift from bullish to bearish sentiment in the market. The pattern resembles a human head with two shoulders on either side
In-complete head and shoulders
A head and shoulders pattern is not complete until the neckline is broken.
Target and stop-loss
The projected target is often calculated by measuring the vertical distance from the head to the neckline and subtracting it from the breakout point.