IntermediateLesson 2 of 4 · 9 min
Head and Shoulders
Three peaks, a sloping neckline and what changes in structure as it forms.
Illustrative chart · Head and shoulders top
Why it matters
The right shoulder is a lower high — the first sign that the up-trending structure is weakening. The neckline break then produces a lower low.
Seen this way, the pattern is simply a trend change described in swing terms.
Common mistakes
Labelling any three bumps as a pattern, and acting before the neckline breaks, are the most frequent errors. Clear proportion and a clean break make the reading more useful.
Key takeaways
- The lower right shoulder is the key clue.
- Wait for the neckline.
- It is a structural shift, not a magic shape.
Charts are illustrative examples, not real market data. This content is for educational purposes only and is not financial advice.