Head and shoulders, and the inverse head and shoulders

Head and shoulders (a top)

1. Left shoulder: a high, then a dip.
2. Head: a higher high, then another dip.
3. Right shoulder: a lower high, about the height of the left one.
4. Neckline: the line through the two dips. A close below it completes the pattern.

Inverse head and shoulders (a bottom)

The same upside down: three lows, the middle one lowest, and a close above the neckline is the buy.

Trading it

• Entry on the close through the neckline.
• Stop above the right shoulder (below it for the inverse).
• The classic target is the distance from the head to the neckline, measured from the break (stops and targets).

Draw the neckline yourself in Find Better Charts with a trendline, and watch it at key levels.