Head & Shoulders (and Inverse)
Three pushes — the middle one highest — with each rally weaker: the classic anatomy of a trend dying.
Reversal PatternsIntermediate 5 min read· Lesson 2 of 6 in Chart Patterns
Structure & psychology
Left shoulder (new high), head (higher high, but the pullback holds lower), right shoulder (LOWER high — buyers failing for the first time). The neckline joins the two troughs. It's a downtrend being born inside an uptrend: the right shoulder is the first lower high. The inverse pattern bottoms downtrends identically.
Entry
Close through the neckline; the frequent retest of the neckline from below is the second-chance entry with tighter risk.
Stop loss
Above the right shoulder — a rally past it rebuilds the higher-high structure and voids the pattern.
Target
Head-to-neckline height projected from the break — the same measured-move logic as double tops.
Failure conditions
Neckline reclaimed after the break (failed H&S are famously explosive reversals), or the 'right shoulder' pushing past the head. Sloppy, wick-riddled necklines are a warning the pattern is being imagined.