The head and shoulders candlestick pattern is a reversalWhat is a trend reversal? A trend reversal is when the mark... More pattern that occurs after an uptrendWhat are uptrends in trading? When the price of an asset o... More in the priceWhat are value stocks? A value company is a company that app... More.
The head and shoulders pattern can be identified by two peaks of approximately the same level (representing the shoulders), with a third, higher peak in between them representing the head. Once this pattern occurs, the is generally considered to be over and the priceWhat is price? The price is the measure of the value of good... More is expected to fall.
You will generally find at the bottom of the head (which is called the neckline) and at the bottom of the shoulders. It is said that once the neckline is broken, the price will drop by the same amount as the distance from the head to the neckline.
(2) Head
Further reading
Learn more about how to analyse your candlestick charts:
