Head and shoulders
Three peaks, the middle one highest
What it is
A peak, a higher peak, then a lower peak, with a rough line connecting the two intervening lows, called the neckline.
What it may suggest
A trend failing to make progress. A close below the neckline is the pattern completing. The inverse version, three troughs with the middle one lowest, forms after a decline and completes on a close above its neckline.
Where it fails
Heavily pattern-matched by people looking for it, so it is claimed far more often than it completes. Without the neckline break it is just three bumps.
Also called head & shoulders, inverse head and shoulders.
More chart patterns
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