Head and Shoulders Pattern

Head & Shoulders Patterns

Classic Reversal Structures Every Trader Should Know

1. Head & Shoulders (Bearish Reversal)


The Head & Shoulders pattern is a bearish reversal formation that typically appears after an established uptrend. It signals a possible shift from bullish to bearish market conditions.

This structure consists of three swing highs:
• Left Shoulder – first peak
• Head – highest peak
• Right Shoulder – final peak, similar in height to the left shoulder

Identification Rules
• Left Shoulder < Head > Right Shoulder
• Left Shoulder ≈ Right Shoulder (symmetry improves reliability)

Volume ideally declines as the pattern forms, showing weakening buying pressure.

Between the peaks are two pullbacks (swing lows). Connecting these lows forms the neckline. A confirmed break below the neckline completes the pattern and signals bearish continuation.

2. Inverse Head & Shoulders (Bullish Reversal)


The Inverse Head & Shoulders is the bullish counterpart and typically forms after a downtrend. Instead of peaks, the pattern is made of three troughs:
• Left Shoulder – first low
• Head – lowest point
• Right Shoulder – higher low, similar to the left shoulder

Identification Rules
• Left Shoulder > Head < Right Shoulder
• Left Shoulder ≈ Right Shoulder (symmetry improves reliability)

Volume often contracts during formation and may expand on the neckline breakout.

The highs between the troughs form the neckline. A break above the neckline confirms the bullish reversal.

3. Complex Head & Shoulders Variations


Complex variations follow the same logic as standard H&S patterns but include:
• Multiple shoulders on one or both sides
• More than one head

Despite the added structure, these patterns still rely on:
• Symmetry
• Clear neckline definition
• Breakout confirmation

Traders should treat them the same way as standard formations, but with extra patience.

4. Measurement Rule (Profit Targets)

Standard Head & Shoulders (Bearish)



• Measure the vertical distance from the head to the neckline
• Subtract that distance from the neckline breakout level
• This projects a downside target

Inverse Head & Shoulders (Bullish)

This is very simple. It’s exactly the same as the above Standard Head & Shoulders (Bearish), but inverted. Same concept. Just upside down.

** Tip **
When multiple heads exist, use the most extreme head (highest for bearish, lowest for bullish) for measurement.

Final Notes for Traders

Head & Shoulders patterns remain effective because they visually represent trend exhaustion and shifting market psychology.

When trading these patterns, always emphasize:
• Structure first
• Confirmation second
• Risk management always