Head and Shoulders

Definition

In technical analysis, a chart formation that resembles a human head and shoulders and is generally considered to be predictive of a price reversal.

A head and shoulders top (which is considered predictive of a price decline) consists of a high price, a decline to a support level, a rally to a higher price than the previous high price, a second decline to the support level, and a weaker rally to about the level of the first high price.

The reverse (upside-down) formation is called a head and shoulders bottom (which is considered predictive of a price rally).

Related Terms

Other terms related to 'Head and Shoulders' starting with the letter 'H'

Historical Volatility, Hand Held Terminal, Hybrid Instruments, Hedge Fund, Hedge Ratio

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