Categories: Forex Glossary
Head and shoulders is a classical chart pattern. It is one of the popular and most reliable trend-reversal patterns, meaning that the price is likely to move against the previous trend. There are two types of head and shoulders pattern: ‘Head and shoulders top’ and ‘Head and shoulders bottom’, the first one occurs in an uptrend and later one in a down-trend.
Head and shoulders pattern has four main parts: two shoulders, a head and a neckline. The head is in the middle and a shoulder on each side of it. The neckline is drawn connecting the high/lows (lows for uptrend and highs for downtrend) of the shoulders.
