A head and shoulders is a reversal formation: three peaks where the middle one (the head) is highest and the outer two (the shoulders) are lower and roughly level. A break of the neckline drawn under the two intervening lows completes it and turns the trend down.
- 1Left shoulder
- 2Head — the higher high
- 3Right shoulder — lower, and the tell
No instance passed the hard criteria in the last 7 days. This one is 10 days old and is dated as such rather than re-presented as current.
Run this head and shoulders pattern read yourselfWhat the engine actually checks
“Looks like one” is not a rule. Detection requires every hard criterion and scores the confluences — fail a hard criterion and it is not this setup, it is a hope with a nickname.
Hard criteria — all required
- ▪Three peaks with the middle peak exceeding both outer peaks.
- ▪Shoulders within 15% of each other in height — beyond that it is not symmetric enough to be this pattern.
- ▪A definable neckline through the two intervening lows.
Confluences — weighted, not required
- ▫Volume declining from left shoulder to head to right shoulder.
- ▫The formation appearing after a genuine uptrend rather than inside a range.
- ▫Neckline break on expanding volume.
Trading it
- 1Where you are wrongA close back above the right shoulder. The neckline break is the trigger, but the right shoulder high is where the reversal thesis is actually wrong — using the neckline itself as the stop puts you inside the noise of the retest that follows most breaks.
- 2EntryEither the neckline break itself, or the retest of the broken neckline from beneath. The retest happens often enough here that entering on the break alone means accepting a materially worse average entry in exchange for never missing one.
- 3ObjectiveMeasure from the head to the neckline and project that distance down from the break. On the daily timeframe this target is frequently far away, which means the trade is a hold rather than a scalp and should be sized accordingly.
Worked example — real numbers
head-to-neckline distance 16.00 projected down from the break at 547.00. A valid formation offering under about 1.5R is still a valid formation and still not worth taking — valid and worth it are different questions.
Size this trade against your account →The scoreboard
Resolution by grade, market and timeframe — because a single blended number would let strong contexts carry weak ones, which is how every invented “success rate” in this category is constructed.
| Grade | Market | Timeframe | Resolution | Sample |
|---|---|---|---|---|
| A | Equities | 4H | collecting | no resolved sample yet |
| A | Equities | 1D | collecting | no resolved sample yet |
| A | Indices | 4H | collecting | no resolved sample yet |
| A | Indices | 1D | collecting | no resolved sample yet |
| A | FX | 4H | collecting | no resolved sample yet |
| A | FX | 1D | collecting | no resolved sample yet |
| B | Equities | 4H | collecting | no resolved sample yet |
| B | Equities | 1D | collecting | no resolved sample yet |
| B | Indices | 4H | collecting | no resolved sample yet |
| B | Indices | 1D | collecting | no resolved sample yet |
| B | FX | 4H | collecting | no resolved sample yet |
| B | FX | 1D | collecting | no resolved sample yet |
| C | Equities | 4H | collecting | no resolved sample yet |
| C | Equities | 1D | collecting | no resolved sample yet |
| C | Indices | 4H | collecting | no resolved sample yet |
| C | Indices | 1D | collecting | no resolved sample yet |
| C | FX | 4H | collecting | no resolved sample yet |
| C | FX | 1D | collecting | no resolved sample yet |
Where this traps people
Head and Shoulders vs Double top
A double top is two peaks at roughly the same level; head and shoulders is three with a higher middle. Both are reversals off a prior uptrend and both complete on a break of the low between the peaks — the head and shoulders simply gives you one more peak of information before it commits.
Drop your chart and the engine checks it against the same hard criteria listed above — the ones it uses on every scan. First read is free and needs no account.
Questions traders actually ask
- Is head and shoulders reliable?
- It is one of the most-studied reversal formations and also one of the most-watched, which cuts both ways — obvious structure attracts obvious stop placement. ORIN publishes resolution by grade rather than a headline reliability figure, and the scoreboard here is still collecting.
- Where do you draw the neckline?
- Through the two lows between the shoulders and the head. If those lows sit at different levels the neckline slopes, which is normal — an upward-sloping neckline is a weaker signal than a flat or downward one.
- What is an inverse head and shoulders?
- The same formation upside down: three troughs with the middle lowest, completing on a break above the neckline and reversing a downtrend into an uptrend. The rules mirror exactly, including the stop belonging at the right shoulder.
- Does volume matter in this pattern?
- It is scored as a confluence rather than required. Classically volume declines across the three peaks and expands on the break; when it does the read is stronger, and when it does not the formation can still resolve.
- How long should the pattern take to form?
- There is no fixed count, but the two shoulders should take comparable time. A right shoulder that forms in a fraction of the time the left one took usually indicates a different market condition than the pattern assumes.
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