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Investment
Head and Shoulders
A chart pattern that looks like a head between two shoulders and usually signals a trend reversal.
The head and shoulders is one of the most reliable reversal patterns. There is also an inverted version that signals a bottom. Volume usually decreases on the right shoulder and increases on the neckline break.
It's a picture on the chart that looks like a person shrugging — and often means the uptrend is tired and about to reverse.
Real world: A stock makes a high (left shoulder), then a higher high (head), then another lower high (right shoulder). When price breaks below the neckline, traders expect a big drop.
💡 Head and Shoulders is a classic warning that the current trend is probably ending.