Glossary · from the DESK dictionary
Head and Shoulders
A chart pattern with three peaks, where the middle one (the 'head') is higher than the two outer ones (the 'shoulders').
In plain words
A classic pattern signaling a reversal from an uptrend into a downtrend.
In more detail
The head and shoulders formation consists of three highs, the middle being the highest, connected by a neckline. It counts as a reversal pattern, and the target is usually projected as the distance from head to neckline below the break. Empirical testing is sobering: the hit rate is around 60 percent, the projected target is reached markedly less often, and identification depends heavily on interpretation.
Example
Price breaks the neckline at 84 with a head at 102 — the projected target is 66. In fact it falls to 79 and turns. The break was right, the target too ambitious.
What it means for traders
One of the best-known and most widely discussed patterns in classic technical analysis.
Common pitfalls
Chart patterns are subjectively interpreted and offer no guarantee of success — false signals are common.
Related terms
Inverse Head and Shoulders · Resistance · Support · Top Reversal
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DESK is a research tool and not investment advice. Page generated: 2026-10-12.