# Head and Shoulders Pattern and Inverse Head and Shoulders

Source: https://www.tradicted.com/lessons/chart-patterns/head-and-shoulders-pattern/

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A head and shoulders pattern is three highs in a row after a rise. The middle high, the head, is the highest. The two beside it, the shoulders, sit lower and at about the same price.

Under the three highs runs the neckline: a line through the two lowest points between them. Until a candle closes below the neckline, the shape is only a potential head and shoulders.

An inverse head and shoulders is the same shape upside down, after a fall.

The free lesson on this page has three charts. You mark the three tops and draw the neckline, call the close that confirms it, draw an inverse neckline yourself, then call one that never breaks.

The charts are generated, with no ticker and no dates.

## What does a head and shoulders pattern look like?

| Part | What it is |
|---|---|
| Left shoulder | A swing high after a rise, then a dip |
| Head | A higher high, then a second dip |
| Right shoulder | A third high, lower than the head |
| Neckline | A line through the lows of the two dips |
| Break | A candle closing below the neckline |

[StockCharts' ChartSchool](https://chartschool.stockcharts.com/table-of-contents/chart-analysis/chart-patterns/head-and-shoulders-top) puts it this way: "A Head and Shoulders Top reversal pattern forms after an uptrend."

On the lesson's first chart the price climbs from about 144 to a high of 153.45. That is the left shoulder. It dips to 148.65, then climbs past the first top to 158.24, the head. The second dip reaches 149.55. The third top stops at 153.75, the right shoulder.

The right shoulder is 4.49 below the head and 0.30 above the left shoulder. Each top is 14 trading days after the one before.

The lesson asks what changed at the third top. Buyers pushed a third time and fell short of the last high.

## Do the shoulders have to match?

No. Thomas Bulkowski's *Encyclopedia of Chart Patterns* says the two shoulders "appear at about the same price level."

He calls symmetry "usually a good clue to the veracity of the formation."

The lesson's shoulders are 0.30 apart. On a real chart they can sit further apart, or one can be wider than the other. The head still has to be the highest of the three.

## How do you draw the neckline?

Draw it through the lowest points of the two dips. One sits between the left shoulder and the head, the other between the head and the right shoulder. Then extend the line to the right.

![A rising daily chart with three tops, the middle one highest, an arc over each and a slightly rising line under the two dips between them](https://www.tradicted.com/lessons-img/pat_l2-pat_l2_c04.s4-62440af4.webp)

*Three tops, the middle one highest, and the neckline through the two dips between them. So far it is only a potential head and shoulders.*

On the lesson chart the neckline runs from 148.65 to 149.55 over 15 days. It rises about 0.06 a day.

A neckline does not have to be flat. ChartSchool: "Depending on the relationship between the two low points, the neckline can slope up, down, or be horizontal."

John Murphy's *Technical Analysis of the Financial Markets* says it "generally has a slight upward slope at tops."

In the lesson you mark the three tops first, then draw the neckline. Is it a head and shoulders yet? Only a potential one.

## When is a head and shoulders confirmed?

When a candle closes below the neckline. A wick under the line does not count. A long wick is a price the day reached and [gave back](/lessons/candlestick-patterns/how-to-read-candlesticks/) by the close.

ChartSchool: "The head and shoulders pattern isn't complete, and the uptrend is not reversed until the neckline support is broken."

Murphy calls "a decisive closing violation of that neckline" the deciding factor.

Five days after the right shoulder the price is down at the line. That day's low, 150.21, dips six cents under the neckline at 150.27. It closes at 151.05, above it. The lesson asks whether the line holds or breaks.

![The same chart two days later: a tall red candle closes below the rising neckline](https://www.tradicted.com/lessons-img/pat_l2-pat_l2_c04.s6-01a168f3.webp)

*A close below the neckline. Now traders call it a head and shoulders.*

The next day closed at 149.10, under the line at 150.33. That close is the break. Now traders call the shape a head and shoulders.

Many guides also want volume to rise on the break. [Carol Osler of the Federal Reserve Bank of New York](https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr42.pdf) studied 100 US stocks from 1962 to 1993. Trading volume rose on the days the price crossed the neckline.

Volume is worth watching, but the lesson judges the break on the close alone.

Many guides measure from the head down to the neckline and project that distance below the break as a price target. The lesson sets no target.

## What happens after the break?

Sometimes the price comes back up to the neckline before moving on. The broken line is now overhead. ChartSchool: "Once support is broken, it is common for this same support level to turn into resistance."

![After the break the price climbs back to the neckline, a wick touches it from below, then the price falls well below it](https://www.tradicted.com/lessons-img/pat_l2-pat_l2_c04.s8-61f7db23.webp)

*The price came back up to the neckline, touched it from below and turned down.*

On the lesson chart the price closed lower for three more days, down to 148.40. Then it climbed back.

The fourth day after the break reached a high of 150.63, at the neckline. It closed at 150.00, under it. The lesson asks whether the line holds or breaks. It held.

Six days later the price closed at 144.87.

Some traders go short on the first close below the neckline. Others wait for a retest like this one.

Not every break gets one. ChartSchool says the price returns "Sometimes, but certainly not always." Murphy: "The return move does not always occur."

## What is an inverse head and shoulders?

An inverse head and shoulders is three lows in a row after a fall, the middle one lowest. Its neckline runs through the two highest points between the lows. It is confirmed by a close above the neckline.

On the lesson's second chart the price falls from about 152 to a low of 145.67, the left shoulder. It bounces to 151.28, falls to 141.67 for the head, then bounces to 150.88.

The right shoulder bottoms at 146.07, 4.40 above the head and 0.40 above the left shoulder.

In the lesson you draw this neckline yourself. It runs from 151.28 to 150.88 and falls slightly, about 0.03 a day. Murphy: "For basing patterns, most necklines have a slight downward tilt."

![A falling daily chart with three lows, the middle one lowest, a U under each and a slightly falling line across the two highs between them, with the last candle at the line](https://www.tradicted.com/lessons-img/pat_l2-pat_l2_c05.s2-1a1add64.webp)

*Upside down after a fall: a potential inverse head and shoulders, the price back at its neckline.*

Five days after the right shoulder a candle's wick reached 151.78, above the line. It closed at 149.02, under it.

The next day touched the line again and closed under it at 150.07. Two days at the line, no close above it.

![The next candle closes above the falling neckline and the price climbs over the following days, dipping back to the line once](https://www.tradicted.com/lessons-img/pat_l2-pat_l2_c05.s3-476435dd.webp)

*A close above the neckline confirmed it. The price dipped back to the line, closed above it and climbed.*

The day after closed at 152.28, above the neckline at 150.51. That close confirmed the inverse head and shoulders.

The price came back to the line three days later. A wick dipped to 149.95, under the neckline. The day closed at 151.93, above it. Eight days after the break the price closed at 156.95.

## Can a head and shoulders fail?

Yes. Any pattern can fail. The price can turn back up before any close under the neckline.

A break can also be followed by a close back above the line. Murphy calls that a failed head and shoulders. A close through a line that does not stay there is a [false break](/lessons/support-and-resistance/false-breakout/).

![Another rising chart with three tops, the middle one highest, and a rising neckline, with the last candle's wick resting on the line](https://www.tradicted.com/lessons-img/pat_l2-pat_l2_c06.s0-1b4d2171.webp)

*Another potential head and shoulders, the price down at its neckline.*

The lesson's third chart has three tops too: 152.94, 157.88 for the head, 153.56. The neckline is already drawn.

Five days after the right shoulder the price is down at it. That day's low, 147.21, rests on the line. It closes at 148.93. The lesson asks hold or break.

![The price turns up from the neckline and climbs past the right shoulder to about the height of the head](https://www.tradicted.com/lessons-img/pat_l2-pat_l2_c06.s1-c8c25bee.webp)

*No close below the neckline. The price climbed past the right shoulder instead.*

It held. The next day dipped to 147.70 and closed at 149.55. Six days later the price closed at 155.26, above the right shoulder. Ten days after the touch a high of 157.97 passed the head's 157.88 by nine cents.

No candle closed under the neckline, so the shape never became the pattern. Bulkowski shows one like it: "The formation is perfect except that it fails to descend."

Under his chart he writes: "Symmetry and volume patterns offer no clue to the eventual failure."

## What is the difference between a head and shoulders and a triple top?

The height of the middle top. In a head and shoulders the middle top is the highest. In a triple top all three are at about the same level. Murphy describes the triple top as "Similar to the head and shoulders except that all peaks are at the same level."

A [double top](/lessons/chart-patterns/double-top-and-double-bottom/) has two tops at about the same level. Its line is the low of the one dip between them.

The lesson covers the head and shoulders and its inverse only.

## Where does the head and shoulders come from?

Robert Edwards and John Magee described the head and shoulders in *Technical Analysis of Stock Trends*, first published in 1948.

The ten patterns Andrew Lo, Harry Mamaysky and Jiang Wang wrote as rules a computer could find included the head and shoulders and its inverse. The [Lo, Mamaysky and Wang study](/research/lo-technical-2000/) has what they found.

The other patterns, each with the line traders watch, are on the [chart patterns](/lessons/chart-patterns/) page.

## Key points

- A head and shoulders is three highs after a rise. The middle one, the head, is the highest.
- The neckline runs through the lows of the two dips between the highs. It can slope.
- It stays a potential one until a candle closes below the neckline. A wick does not count.
- After the break the price sometimes comes back to the neckline from below. Not every break gets a retest.
- An inverse head and shoulders mirrors it: three lows after a fall, confirmed by a close above the neckline.

Press Start above and mark the three tops. The next lesson, [bull and bear flags](/lessons/chart-patterns/bull-flag-and-bear-flag/), waits on a close through a flag's edge the same way.