Definition
A chart shape with three peaks: a higher one in the middle (the head) between two lower ones (the shoulders). Some traders read it as a sign an uptrend may be losing steam.
The story
Price rises to a peak, dips, rises to a higher peak, dips again, then rises to a lower peak. A line under the two dips is called the neckline, and many traders watch whether price breaks below it. The shape doesn't always play out, and two people can look at the same chart and disagree about whether it's even there. An upside-down version, the inverse head and shoulders, is read the opposite way.
Why you'll see it
It's one of the most widely named chart patterns, so it comes up in commentary when a market stalls after a run.
Connects to
ResistanceSupportTrend reversalBreakoutDouble top and double bottom
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms