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 ?
Once the head and shoulders pattern is complete, a common method by technical analysts is to place buy orders just outside the 'neckline' to capitalise on potential breakouts to the upside.
Just like any other trading method, the head and shoulders pattern should only be used as an indicator, and not an exact science.
Summary: New Zealand Dollar Short Head and Shoulders Pattern -EURUSD resistance at 1.34 -AUDUSD top not yet confirmed -NZDUSD short term head and shoulders top -USDJPY...
There is an active small bullish inverted head and shoulders pattern that became active when price crossed above $163.
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.
The implications from a short term head and shoulders pattern destroy my confidence in the bullish count though.
A Head and Shoulders pattern is a reversal pattern and for the pattern to be reliable, it should occur in an uptrend.&nbsp; An uptrend is reversed at the left shoulder and sellers drive prices back up to the neckline.
The GBPUSD sports a short term inverse head and shoulders pattern. The EURUSD made an inside day.
An inverse Head and Shoulders pattern is a reversal pattern and for the pattern to be reliable, it should occur in a downtrend.&nbsp; A downtrend is reversed at the left shoulder and buyers drive prices back up to the neckline.
Summary: We've been watching the GBPUSD closely of late due to head and shoulders patterns at various degrees of trend.
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