Head and Shoulders

Triangles  Triangles Symmetrical broadening wedge  Symmetrical broadening wedge
Descending wedges  Wedges Broadening wedges  Broadening wedges
Flags and pennants  Flags and pennants right-angled broadening wedge Right-angled broadening wedge
Head and shoulders  Head and shoulders Double tops  Double (or triple)
 tops (or bottoms)
Rectangle  Rectangles cup with handle  Cup with handle

 

The head and shoulders chart pattern is a 95% reliable forex reversal configuration which provides trading signals that are often used by foreign exchange traders. The head and shoulders pattern features three price spikes: one head exceeds past the two shoulders which have approximately the same height, and the two lows are connected by a "neckline". Forex transaction volumes are generally very high on the first shoulder, then they gradually decrease during the formation of the head and the second shoulder. The low volumes of the right shoulder indicate a probable reversal of forex prices. The higher the head is, the more reliable the pattern will be. The probability of a reversal will be greater when the currency price crosses the neckline support level.

This chart pattern also exists in a downtrend (an inverted head and shoulders), but it is considered more reliable in an uptrend.

Head and shoulders