This pattern consists of three peaks with the middle one being the tallest with two smaller peaks on each side. In case of a top, the left peak or shoulder is the first swing high. After a brief correction, a higher high is established with less volume, followed by another weak swing high with very low volume. When the trendline connecting the two swing lows are broken on the downside, the pattern is triggered. The bullish version is called a Head & Shoulders bottom. Sometimes, there are more than two shoulders visible, creating the pattern is called Complex Head & Shoulders.
Most Used Trendz of Head & Shouldrs Pattern
Head & Shoulders Pattern
Inverted Head & Shoulders Pattern
Advantages & Limitations of Head and Shoulders Pattern
The Head & shoulders Top is the most successful bearish pattern even if it is the most famous one too. The performance of the Inverted version or Bottom is good too, even if not as good as the Top. As the pattern requires something to reverse, the longer the move leading to the left shoulder, the more can be expected after the pattern triggers. The volume pattern is a good indicator with low volume for right shoulder of the Top & high volume for the Bottom improves the performance of the pattern a lot.