Definition
Head and Shoulders
Head and shoulders is a bearish reversal chart pattern with three peaks — a higher middle peak between two lower ones.
The pattern forms a left shoulder, a higher head, and a right shoulder, with a neckline connecting the lows between them. A confirmed break below the neckline signals a trend reversal from up to down, with a measured target equal to the height from head to neckline projected downward. The inverse head and shoulders is the bullish version at a bottom.
NSE traders watch for head and shoulders on Nifty, Bank Nifty, and stocks at the end of strong trends, using the neckline break — ideally with rising volume — as the trigger. False breaks are common, so confirmation and a sensible stop are essential.
Related terms
- BreakoutA breakout is when price moves decisively beyond a defined support, resistance, or pattern boundary, often starting a new move.
- TrendlineA trendline is a straight line connecting a series of highs or lows to visualise the direction and slope of a trend.
- Support and ResistanceSupport is a price level where buying tends to halt a fall; resistance is a level where selling tends to cap a rise.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.