Investing Dictionary
Charts

What is Head and Shoulders?

A chart pattern that often signals a trend reversal

Full Explanation

A head and shoulders pattern has three peaks — a smaller one (left shoulder), a higher one (head), and another smaller one (right shoulder). When the stock breaks below the neckline connecting the troughs, it's considered a bearish reversal signal.

Pro Tip

One of the most well-known reversal patterns. Traders watch the "neckline" closely.

Related Charts Terms

Candlestick

A chart shape that shows a stock's price movement in a time period

Fibonacci Retracement

Key price levels where a stock might pause or reverse

Support Level

A price where a stock tends to stop falling

Double Bottom

A "W" shaped pattern that signals a potential reversal upward

View all Charts terms →

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