Facts don't always translate into reality, but the facts are here for the NAS
statistics of head and shoulders patterns
- In 93% of cases, the exit from the head and shoulders pattern is bearish. - In 63% of cases, the price reaches the objective of the head and shoulders pattern when the neck line is broken. - In 96% of cases, the bearish movement continues at the break in the neck line. - In 45% of cases, after exiting, the price makes a pullback in resistance on the neck line of the head and shoulders pattern.
Notes on the head and shoulders pattern
- The longer the movement before the formation of a Head and Shoulders (H&S) pattern is, the more forceful the bearish movement at the break of the neck line will be. - The more abrupt the movement before the formation of a Head and Shoulders (H&S) pattern, the more forceful the bearish movement at the break of the neck line will be. - Head and shoulder patterns with an upward neck line offer better performance. - If the left shoulder is higher than the right shoulder, the head and shoulder pattern offers better performance. - After exiting the head and shoulders pattern, pullbacks in resistance on the neck line are detrimental to performance.