What is a head and shoulders pattern? The anatomy

The pattern has five parts, all visible in the drawing at the top of this page. Price rallies to a peak and pulls back: the left shoulder. It rallies to a higher peak and pulls back again: the head. It rallies a third time but stalls below the head: the right shoulder. The neckline joins the two pullback lows, and once a candle closes below it, the pattern is complete.

The shape is old. Richard Schabacker described it in Stock Market Theory and Practice (1930), and Robert Edwards and John Magee covered it in detail in Technical Analysis of Stock Trends, first published in 1948. It is one of the reversal patterns in the chart patterns guide; this guide goes deeper into its rules and its failures.

Left shoulder
A peak in an uptrend followed by a pullback. On its own it is just another higher high.
Head
A peak above the left shoulder, followed by a second pullback. If the pattern completes, it was the last high of the uptrend.
Right shoulder
A rally that fails below the head: a lower high. It is a warning, not a signal.
Neckline
The line through the two pullback lows on either side of the head. It can be flat or sloped, and a close below it confirms the pattern.

The prior trend: no uptrend, no head and shoulders top

A reversal pattern needs something to reverse. A head and shoulders top only counts after a clear uptrend, a series of higher highs and higher lows; three bumps inside a sideways range are just a range. The inverse version needs a prior downtrend in the same way.

In market structure terms, the pattern is a trend change in slow motion. The head is the last higher high of the uptrend. The right shoulder is the first lower high. The neckline break is price closing below the last higher low, the change of character in the drawing below. That is why the break matters and the shoulders alone do not: until it happens, the structure of the uptrend is intact.

Hypothetical failure case: a stock drifts between $40.00 and $42.00 for six weeks and prints three small peaks, the middle one at $42.30. It looks like a head and shoulders, but there was no uptrend to end. A break below $40.00 there is a range breakdown, to be judged by range rules, not by the target of a reversal pattern.

Turn your phone sideways to read the drawing. Tap to close.

A hand-drawn zigzag uptrend with swing points labeled HL, HH, HL, HH and a dashed line at each prior high marked BOS where price breaks it; then price makes a lower high, labeled LH, and breaks below the last higher low, marked CHoCH (change of character) in red, with notes reading uptrend and trend change?

Drawing the neckline: flat, rising or falling

Draw the neckline through the two pullback lows: the low between the left shoulder and the head, and the low between the head and the right shoulder. Use the same points every time, candle lows or closes, and draw the line before the break, not after it.

Necklines are rarely flat. A falling neckline is usually read as more bearish than a rising one, because the second pullback low was already lower than the first: buyers were weakening before the break. If it falls steeply, price may take a long time to cross it, and some traders use a close below the low between the head and the right shoulder instead.

With a sloped line, measure straight down from the head to the neckline beneath it, and project that height from where price actually breaks. Hypothetical: lows at $60.00 and $61.00, the head at $66.00 and the neckline near $60.50 under the head, so the height is $5.50. Price crosses the rising line at $61.20, and the estimate is $61.20 − $5.50 = $55.70.

Confirmation: a close below the neckline, not the right shoulder

The most common mistake is selling the right shoulder. While it forms, it is just a pullback inside an uptrend, and it can still turn into a new high above the head. The pattern is confirmed only when a candle closes below the neckline on the timeframe you trade. A wick through the line that closes back above it is a rejection, not a break; the guide to reading candlesticks explains why only closes count.

How decisive the close must be is a judgment call. Edwards and Magee asked for a close below the neckline by roughly 3% of the price; many traders today accept any clear close and rely on the stop instead. The drawing below shows the textbook break next to a double top, which is confirmed the same way; see double top and double bottom.

Volume, as it is classically described:

  • Heavy on the rally to the left shoulder, often lighter on the rally to the head: a first sign of fading demand.
  • Lighter again on the right shoulder.
  • Expanding on the break. For a top this is welcome but not strictly required; real charts rarely match the textbook.
  • Intraday, compare volume with what is normal for that time of day, since the open is always busier; that is what relative volume measures.

Turn your phone sideways to read the drawing. Tap to close.

Two hand-drawn line charts: a head and shoulders with the shoulders, head and neckline labeled and price breaking below the neckline, labeled break; and a double top with a neckline at the low between its two peaks and a break below it.

Head and shoulders target, stop and size: a worked example

Hypothetical setup on a 1-hour chart: the left shoulder peaks at $83.00, the head at $86.00 and the right shoulder at $83.40, with both pullback lows at $80.00, a flat neckline. A candle closes at $79.40, below the neckline, on rising volume.

Target. The head is $6.00 above the neckline, so the measured-move convention projects $80.00 − $6.00 = $74.00. Treat it as an estimate: price often stalls at a nearer support level first, and sometimes runs past it. Here an old support zone sits at $77.90–$78.00, so a first target goes just above it, at $78.10.

Stop, option 1: above the right shoulder. Short at $79.40 with a stop at $83.60, where the whole pattern is proven wrong: $4.20 of risk for $1.30 to the first target (under 0.5R), or $5.40 to the measured target (about 1.3R).

Stop, option 2: above the retest. Price comes back up to the neckline, as in the drawing at the top, wicks to $80.30 and closes at $79.70, back under the line. Short there with a stop at $80.50, just above the retest high: $0.80 of risk for $1.60 to the first target, or 2R. This tighter stop gets hit more often, and many breaks never retest, so you may simply miss the trade.

Size. Risking 1% of a $10,000 account ($100) allows 23 shares with the right-shoulder stop ($100 ÷ $4.20) and 125 with the retest stop ($100 ÷ $0.80): same dollar risk, different share count. The position size calculator does the math, and the risk-reward ratio guide explains why the second plan is the better trade. The drawing below shows the 1:2 shape for a long trade; for this short, flip it.

Short selling has its own risks (see short selling), so many traders use a head and shoulders top differently: as the signal to exit a long position or tighten its stop.

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A hand-drawn trade plan: an entry line, a red box down to the stop labeled risk = 1R, a green box up to the target labeled reward = 2R, and a note reading R:R = 1:2.

Inverse head and shoulders: the bullish version

The inverse head and shoulders is the mirror image after a downtrend: a low (the left shoulder), a lower low (the head) and a higher low (the right shoulder), with a neckline across the two rally highs. A close above the neckline confirms it, the target convention adds the head-to-neckline height to the breakout, and the stop goes below the right shoulder or below a retest low.

Volume matters more here. Many technicians treat a clear rise in volume on the breakout as required for a bottom and merely welcome for a top, which is why the drawing below shows the breakout on a tall volume bar.

Hypothetical: after a decline, lows at $41.00, $38.00 and $40.80, with the neckline at $44.00. A candle closes at $44.40 on the tallest volume bar in weeks. The height is $6.00, so the estimate is $50.00, and a stop below the right shoulder at $40.60 risks $3.80 for $5.60, about 1.5R. Failure case: the same close on ordinary volume, then a close at $43.70, back under the neckline. That is the warning: exit, or let the stop do its job.

Turn your phone sideways to read the drawing. Tap to close.

A hand-drawn inverse head and shoulders: a left shoulder, a lower head and a right shoulder, with a neckline over the two highs; a breakout candle closes above the neckline on a tall volume bar, with volume bars below the price and a buy triangle; a bracket labeled height from the head to the neckline is repeated above the breakout, labeled target.

Failed head and shoulders: when price closes back above the neckline

Head and shoulders patterns fail often, clean-looking ones included. The usual failure: price closes below the neckline, short sellers pile in, and within a few candles price closes back above the line. The sell stops below the neckline have filled, no new sellers follow, and traders who shorted the break have to buy back, which can push price up fast.

Same hypothetical setup, another day: you short the close at $79.40 with the stop at $83.60 and 23 shares. Two candles later a candle closes at $80.60, back above the neckline. Exiting on that close costs $1.20 × 23 = $27.60; waiting for the full stop costs $4.20 × 23 = $96.60. With the retest plan, the stop at $80.50 fills on the same move: 125 × $0.80 = $100. Each loss is planned and survivable. A close above the head at $86.00 would put the uptrend back in charge.

Patterns also look far more obvious in hindsight. Live, every bounce could be a right shoulder, every new high could be a head, and two traders draw the same neckline a few cents apart. Warning signs before or right after a break:

  • There was no clear uptrend before the pattern.
  • The break comes on ordinary or shrinking volume.
  • The breakout candle, or the next one, closes back above the neckline.
  • A support level or the prior day’s low sits just below the break, leaving no room.
  • The higher timeframe still trends up; check with multi-timeframe analysis.

How to draw a head and shoulders on TradingView

TradingView’s drawing toolbar, on the left of the chart, has a Head and shoulders tool in the Patterns group, but a trend line for the neckline does the job. Draw the lines first and name the pattern second.

A note on our own tool, so you can weigh it: UpTickFlow, our invite-only TradingView indicator, does not detect head and shoulders or any other chart pattern. It waits for a candle to close at a level, draws the entry, stop and target before the trade, scores the setup from 0 to 100 and stays quiet in chop: at most a second check on the level under your neckline, not a scanner.

  1. Mark the swings on your timeframe and confirm the uptrend on the next higher one.
  2. Draw the neckline with the Trend line tool through the two pullback lows and extend it right.
  3. Measure the head-to-neckline height with the Price range tool and copy it below the expected break.
  4. Plan the trade with the Short position tool to see entry, stop, target and reward-to-risk first.
  5. Set an alert on the neckline if you like (see TradingView alerts), then judge the closed candle yourself.