Definitions for "head and shoulders"
A technical analysis term referring to a chart formation in which a price exhibits...
A technical analysis chart, pattern that has three peaks resembling a head and two shoulders. The marketâ€(tm)s price moves up to its first peak (the left shoulder), drops back, then moves to a higher peak (the top of the head), drops again but recovers to another, lower peak (the right shoulder). A head and shoulders top typically forms after a substantial rise and indicates a market reversal. A head and shoulders bottom (an inverted head and shoulders) indicates a market advance.
A major reversal pattern. Following the break of a trendline in an up-trend, the market is unable to recapture the previous high (the head) and a lower peak (right shoulder) is formed. A break below the "neckline", a support line drawn from the trough that formed prior to the head and the trough made prior to the right shoulder, completes the pattern. Price forecasts are made by projecting the range from the neckline to the head, down from the break- down point (the neckline).