Three peaks where the middle one (the head) is the highest and the outer two (shoulders) are roughly equal. A break of the neckline joining the troughs signals a top.
How to identify it
- Left shoulder, higher head, lower right shoulder
- Neckline drawn through the two troughs
- Volume or momentum often weaker on the right shoulder
Entry
Sell a close below the neckline or a retest of it from below.
Stop loss
Above the right shoulder high.
Target
Head-to-neckline height projected down from the break.
Invalidation
Price reclaims the neckline and holds above the right shoulder.
Does it work for you?
Textbook reliability means little until you know your own numbers. Tag your head & shoulders trades in TradeZento and it shows your win rate, average win and loss, and P&L per trade for this pattern, so you know whether to keep it in your playbook.