A head and shoulders pattern is:

Bearish reversal. Head and shoulders is a bearish reversal pattern with three peaks.

Chart Patterns

Triangles, head & shoulders, and more

Chart patterns are formations that predict future price direction based on historical precedent.

Continuation patterns (trend continues): - Flags and pennants: Short consolidation, then continuation - Triangles (ascending/descending): Build pressure, break with trend - Rectangles: Range consolidation within trend

Reversal patterns (trend changes): - Head and Shoulders: Three peaks, middle highest (bearish) - Double Top/Bottom: Two tests of same level, then reversal - Wedges: Rising wedge (bearish), falling wedge (bullish)

Measured move targets: - Pattern height projected from breakout point - Flagpole height for flags/pennants - Head-to-neckline distance for H&S

Pro tip: The head and shoulders neckline break with volume is one of the highest-probability reversal signals.

Common mistake: Seeing patterns everywhere (pattern bias). Better: True patterns should be obvious. If you have to squint to see it, it's probably not there..

Key takeaways

Continuation: flags, pennants, triangles
Reversal: H&S, double top/bottom, wedges
Measure pattern height for targets
Always confirm with volume

Quiz

A head and shoulders pattern is: Answer: Bearish reversal. Head and shoulders is a bearish reversal pattern with three peaks.

Educational content, not financial advice.