Historical Simulator Plug-in
Head & Shoulders Top Formation
Head & Shoulders. This formation has 3 definite peaks- the head, left shoulder, and right shoulder. The middle peak, the head is higher than any either shoulder. This formation anticipates a drop in price below the the neckline.
Unlike the 123 formations, a head & shoulders formation does not rely on annual high or low. They can appear anywhere within a chart. Head & Shoulders may also appear inverted and anticipates a rise in price above the neckline.