Pattern 3 of 18: all patterns
Head and shoulders
Three peaks: a left shoulder, a higher head, and a right shoulder at roughly the height of the left. The line through the two lows between them is the neckline. A close through the neckline completes the pattern.
The head is the last higher high of the uptrend. The right shoulder is a lower high: buyers tried again and could not reach the head. That change from higher highs to a lower high is what the pattern shows.
- Left shoulder, low, head, low, right shoulder, in that order.
- The head stands above both shoulders by at least 15% of its height above the neckline.
- The shoulders are within 35% of each other, and the neckline is not steeper than 35% of the height.
- The right side takes between 0.4 and 2.5 times as long as the left side, so the pattern stays balanced.
How the alerts work for this pattern
- 1Forming
The left shoulder, the head and both neckline lows are in. The scanner tells you a right shoulder near the left shoulder's height would complete it.
- 2Complete
The right shoulder is confirmed. Neckline, stop and target are known.
- 3Close to signaling
Price is within a third of an ATR of the neckline.
- 4Time to act
A candle closes through the neckline.
- xCancelled
Price closes beyond the right shoulder, or the setup runs out of time.
The textbook trade
- Trigger
- A close through the neckline (it can slope).
- Stop
- Beyond the right shoulder, plus a small ATR buffer.
- Target
- The height from the head to the neckline, projected from the break.
Things to watch
- Many traders draw the neckline differently. The scanner always uses the two lows between the shoulders and the head, so the line is the same every time.
- Price often returns to the broken neckline before moving on. Textbooks call this a throwback (or pullback for the inverse).
- A head and shoulders against a strong higher timeframe trend is a weaker shape. Check the hourly or daily chart.
Schabacker called it the most important reversal formation in Technical Analysis and Stock Market Profits (1932). Edwards and Magee devoted a full chapter to it in Technical Analysis of Stock Trends (1948), including the measured move used here.
On our charts
Real detections by the scanner on our own price data (2026-08-01 to 2026-10-19), with the alerts it sent. Times are New York time. Some worked and some did not.
- 1Forming2026-10-19 15:30 NYthe head and both neckline points are in; a right shoulder near 29610.8 would complete it
- 2Complete2026-10-19 16:00 NYcomplete; the trigger is a close through the neckline at 29527.8
- 3Close to signaling2026-10-19 16:00 NYclose to the trigger at 29527.8
- 4Time to act2026-10-19 20:00 NYclosed through 29563.4: entry 29562.8, stop 29660.0, target 29250.8
- 5Result2026-10-19 23:00 NYtime (-0.15R)
- 1Forming2026-10-13 23:00 NYthe head and both neckline points are in; a right shoulder near 158.08 would complete it
- 2Complete2026-10-14 03:00 NYcomplete; the trigger is a close through the neckline at 158.48
- 3Close to signaling2026-10-14 05:00 NYclose to the trigger at 158.47
- 4Time to act2026-10-14 09:00 NYclosed through 158.44: entry 158.83, stop 158.09, target 159.63
- 5Result2026-10-14 15:00 NYstop (-1.00R)
Education, not advice. A pattern describes what many traders watch for; it does not predict what price will do. The textbook stop and target are reference levels, not instructions. Trading involves risk.
Trade your way. The Desk backs the move.
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Trading involves risk. This page is education, not advice; examples come from past data.