Head and Shoulders Pattern

by · January 1, 2010

Head And Shoulders Chart Pattern

HEAD AND SHOULDERS PATTERN (HASP)
a head and two shoulders

Characteristics:
The HASP has a structure that is visually similar to that of a head with two shoulders. It has four elements:
1. A left shoulder (a relative peak)
2. A head (a peak above both shoulders)
3. A right shoulder (a peak parallel to the left shoulder)
4. A neckline (a support or bottom of price activity).

The Head and Shoulders Pattern in Action:
Traders look at the break of the neckline as an entry position. They look at the neckline as a support level. These businessmen will set a target profit that is equal to the distance between the neckline and the head of the chart. The right shoulder is the mark for the stop loss order.

Notes:
1. It is one of the most reliable chart patterns
2. It reaches its projected target in 95% probability.