Head and Shoulders

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Related to Head and Shoulders Pattern: Cup and Handle Pattern

Head and Shoulders

In technical analysis, an indicator in which the price of a security rises to a peak, falls, rises to a higher peak and then falls again, and, finally, rises to a third peak roughly equal to the first and falls again. While, in general, a head and shoulders pattern is considered a bearish indicator, it contains various bullish points, namely immediately before the price rises. These bullish points are called the neckline. When technical analysts see a security falling toward the neckline, they view this as a buy signal because historical patterns have shown that the security's price will rise soon thereafter. On the other hand, the third peak is considered a sell signal.
References in periodicals archive ?
The AUD/USD was lacking direction after a false head and shoulders pattern.
Summary: New Zealand Dollar Short Head and Shoulders Pattern -EURUSD resistance at 1.
An inverse Head and Shoulders pattern is a <strong>bullish reversal pattern</strong>&nbsp;and for the pattern to be reliable, it should occur in a downtrend.
Summary: The GBPUSD sports a short term inverse head and shoulders pattern.
A Head and Shoulders pattern is a <strong>bearish reversal pattern</strong>&nbsp;and for the pattern to be reliable, it should occur in an uptrend.