Head and Shoulders

Anatomy

• Left shoulder: initial peak after an uptrend, then a pullback.
• Head: higher peak driven by exhausted momentum, followed by another pullback.
• Right shoulder: lower peak, often on weaker volume.
• Neckline: trendline drawn through the two pullback lows. The pattern completes on a clean break of the neckline with closing confirmation.

Trading the break

• Entry: retest of the neckline as new resistance after the break.


• Stop: above the right shoulder.


• Target: measured move = vertical distance from head to neckline, projected down from the break point.

Inverse head and shoulders

The mirror image at market bottoms is equally tradable: same anatomy, bullish bias once the neckline breaks to the upside.

Reliability

Backtests across major FX, indices, and gold show the H&S works best when:

• It forms after a mature trend (not after a tiny rally).
• The right shoulder makes a lower peak than the head.
• Neckline break happens on expanding volume / range — a slow sneaky break is more often a fake-out.

How Finvestopia uses H&S

Our pattern detector scans every symbol on H4 and D1; matches with high confidence appear in the instrument page’s pattern panel and feed the radar’s "structure" component.