Head and Shoulders
a.k.a. H&S
A reversal pattern with three peaks, the middle one highest, often marking the end of an uptrend.
A head and shoulders has a left shoulder (a peak), a head (a higher peak) and a right shoulder (a lower peak, about the height of the first). A 'neckline' connects the lows between them.
The story: buyers made one last big push, failed to follow through, and the next rally was weaker. A break below the neckline is the usual signal. Traders often measure the head's height from the neckline to estimate a target. Its upside-down version is the inverse head and shoulders.
Measuring the pattern
- Neckline at 1.2500; head at 1.2800.
- Height: 300 pips.
- A close below 1.2500 suggests a rough target near 1.2200.
Bottom line: A projection, not a promise.
Keep this word for good
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