As of 12/13/2019
  Indus: 28,135 +3.33 +0.0%  
  Trans: 10,776 -13.65 -0.1%  
  Utils: 857 +7.17 +0.8%  
  Nasdaq: 8,735 +17.56 +0.2%  
  S&P 500: 3,169 +0.23 +0.0%  
YTD
 +20.6%  
 +17.5%  
 +20.2%  
 +31.6%  
 +26.4%  
  Targets    Overview: 12/13/2019  
  Up arrow28,600 or 27,400 by 01/01/2020
  Up arrow11,300 or 10,500 by 01/01/2020
  Up arrow880 or 830 by 01/01/2020
  Up arrow9,000 or 8,400 by 01/01/2020
  Up arrow3,250 or 3,075 by 01/01/2020
As of 12/13/2019
  Indus: 28,135 +3.33 +0.0%  
  Trans: 10,776 -13.65 -0.1%  
  Utils: 857 +7.17 +0.8%  
  Nasdaq: 8,735 +17.56 +0.2%  
  S&P 500: 3,169 +0.23 +0.0%  
YTD
 +20.6%  
 +17.5%  
 +20.2%  
 +31.6%  
 +26.4%  
  Targets    Overview: 12/13/2019  
  Up arrow28,600 or 27,400 by 01/01/2020
  Up arrow11,300 or 10,500 by 01/01/2020
  Up arrow880 or 830 by 01/01/2020
  Up arrow9,000 or 8,400 by 01/01/2020
  Up arrow3,250 or 3,075 by 01/01/2020

Bulkowski's Head-and-Shoulders Tops

 

Statistics updated on 11/16/2018.

For more information on this pattern, read Encyclopedia of Chart PatternsEncyclopedia of Chart Patterns., pictured on the right.

If you click on the above link and then buy the book (or anything) while at Amazon.com, the referral will help support this site. Thanks.

-- Tom Bulkowski

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Head-and-shoulders top chart pattern
Head-and-Shoulders Top
 Score your pattern 

 

Head-and-Shoulders Top: Important Bull Market Results

Overall performance rank (1 is best): 19 out of 53
Break even failure rate: 19%
Average decline: 16%
Pullback rate: 68%
Percentage meeting price target: 51%

The above numbers are based on more than 2,800 perfect trades. See the glossary for definitions.

Head-and-Shoulder Top: Identification Guidelines

CharacteristicDiscussion
Price trendUpward leading to the pattern
ShapeLooks like a head perched atop two shoulders. A 3-peak pattern with the middle peak above the others. The pattern should look like a person's head and shoulders, proportional, and not lopsided.
SymmetryThe two shoulders should peak near the same price, be nearly the same distance from the head, and look similar (both wide or both narrow peaks).
VolumeHighest on the left shoulder followed by the head. Trends downward 61% of the time.
NecklineJoins the two armpits.
ConfirmationThe pattern confirms as a valid one when price closes below an up-sloping neckline or below the right armpit when the neckline slopes downward.

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Head-and-Shoulders Top: Trading Tips

Trading TacticExplanation Head-and-shoulders top chart pattern measure rule
The Measure Rule
Measure ruleCompute the height from the head (A in the Measure Rule figure to the right) to the neckline directly below (B) then multiply it by the above 'percentage meeting price target.' Subtract the result from the breakout price (C). The breakout price is where price crosses an up-sloping neckline, or when the neckline slopes downward, use the right shoulder armpit.
Price reversalPrice must have something to reverse, so if the rise leading to the pattern is small, expect a small decline.
ConfirmationWait for confirmation before placing a trade.
TrendsA short-term rise leading to the pattern results in the best post breakout performance.
VelocityA high velocity rise leading to the pattern often results in a larger decline post breakout.
Yearly highPatterns within a third of the yearly high perform worst, but the differences are slight.
PullbacksPullbacks hurt post breakout performance.

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Head-and-Shoulders Top: Example

Head-and-shoulders top chart pattern example

The above figure shows an example of a Head-and-shoulders top chart pattern. The left shoulder (LS) appears above the right shoulder (RS). But, the two shoulders appear symmetrical about the head. A neckline shown in blue, joins the two armpits. Where price closes below the neckline, a breakout occurs and it also confirms the chart pattern as being a valid head-and-shoulders top. A pullback occurs in this example just to make trading interesting.

-- Thomas Bulkowski

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Head-and-Shoulders Top: Other Examples

See Also

 

Support this site! Clicking any of the books (below) takes you to Amazon.com. If you buy ANYTHING while there, they pay for the referral.

My novels:      New                  Bumper's Story Head's Law

Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Encyclopedia of Chart Patterns 2nd Edition Trading Classic Chart Patterns

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