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1985issue C041-4

Four-phase construction of the head-and-shoulders reversal

A head-and-shoulders reversal is assembled in stages. Build the left shoulder, head, right shoulder, and neckline first. Accept the idea only when the matching volume sequence and a decisive neckline crossing agree.

  • A head-and-shoulders top is assembled in four phases: a left-shoulder advance and lull, a higher head that falls back below the left-shoulder peak, a weaker right-shoulder rally, and a crossing of the neckline drawn through the two intervening reaction lows.
  • The top is not complete, and a reversal is not signaled, until the neckline is crossed by a decisive margin.
  • Volume support is heavy then lighter on a top, while a bottom requires expanding activity through the right-shoulder advance and neckline crossing.
  • Complex forms may double the head, the shoulders, or both, and they still confirm only on a break through the zone between heads and shoulders.
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Current trackHead and shoulders64 readingsVolume-price analysis129 readingsBreakout confirmation172 readings

Four phases of a top

A head-and-shoulders top is assembled in four phases. First comes a left-shoulder advance and lull. Next comes a higher head that then falls back below the left-shoulder peak. A weaker right-shoulder rally follows. Confirmation arrives when price crosses the neckline drawn through the two intervening reaction lows.

Volume support on a top

Volume support for a top requires heavy activity on the left-shoulder and head advances, lighter activity on those declines, and a right-shoulder advance quieter than the earlier rallies. That matching activity sequence is the volume-confirmation for the topping structure.

Asymmetry is allowed

A top need not be symmetrical. The neckline may slope upward if the reaction between the head and right shoulder stays well below the left-shoulder peak. One shoulder may be wider, longer, or higher than the other.

The inverted bottom

A head-and-shoulders bottom is the inverted price structure of a top, but its volume sequence differs. The head decline is less active than the left-shoulder decline. The head recovery is more active than the left-shoulder recovery. The right-shoulder advance plus neckline breakout require a large volume expansion.

Without that expanding activity through the bottom’s right-shoulder advance and neckline crossing, a genuine reversal pattern has not formed.

Complex and multiple structures

Multiple, or complex, head-and-shoulders structures double at least the head, the shoulders, or both. Common forms include twin shoulders around a single head, or two heads flanked by two or more shoulders on each side.

Complex reversals show a stronger left-right symmetry tendency than simple ones, so two right shoulders are usually matched by two left shoulders of similar size and duration.

Complex necklines are harder to locate because intervening reactions may not rest on one line. Confirmation still depends on a break through the zone between heads and shoulders.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
3 of 37 in the Head and shoulders track
19891-8 pp.Next on Head and shouldersVolume-confirmed reversal patterns, stops, and measured objectivesA reversal stays a sketch until volume-fade at the late peak is followed by neckline-confirmation, preferably on expanding volume.
All readings on this track · 37 readings
  1. 1982Head and shoulders as a three-path completion test
  2. 1984Stock low clusters as a cycle baseline
  3. 1985Four-phase construction of the head-and-shoulders reversal
  4. 1989Volume-confirmed reversal patterns, stops, and measured objectives
  5. 1991The journal as one checklist for taken and skipped trades
  6. 1991Head and shoulders as a direction hypothesis
  7. 1991Candlestick body and shadow construction with three-Buddha peaks
  8. 1992A three-count drill that binds candlesticks, head and shoulders, and entry rules
  9. 1997Constructing bump and run reversal channels
  10. 1998Testing reversal formations in bond futures
  11. 1999Construction first: extra shoulders, the neckline, and the diamond test
  12. 1999Dead-cat bounce, rollover, and failed reversals
  13. 1999Evaluating time gaps in bond reversal patterns
  14. 2000Constructing head and shoulders and double reversal patterns
  15. 2001Constructing broadening and complex bottoms
  16. 2001Constructing a slanted head-and-shoulders when the chart is tilted
  17. 2002Head and shoulders with dominant-cycle timing
  18. 2002Trendline breaks, right shoulders, and trailing stops
  19. 2003Confirmation tests for bearish top patterns
  20. 2003Commodity top hypotheses on a dollar rebound
  21. 2003A head-and-shoulders test during a bear rally
  22. 2004Pattern breakouts need a primary-trend filter
  23. 2004Reading candlestick closes on trendline and neckline tests
  24. 2004Candle diagnosis needs Western targets and stops
  25. 2004Head-and-shoulders neckline construction
  26. 2005A familiar chart condition is a hypothesis, not a completed decision
  27. 2005A 50-day ceiling and a rising-floor stalemate
  28. 2006A complete trading plan from philosophy to checklist
  29. 2006Thin-market head and shoulders with two averages and MACD confirmation
  30. 2010Head and shoulders as a playback-tested setup
  31. 2011Turning a head-and-shoulders outline into a breakout hypothesis
  32. 2011Volume-confirmed head and shoulders on AIG and Citigroup in 2007
  33. 2013Constructing head-and-shoulders milestone points
  34. 2013Head-and-shoulders geometry versus the filter stack
  35. 2013Algorithmic head-and-shoulders construction
  36. 2018International relative strength as a double-top case study
  37. 2019Structure invalidation before comfort-stops
By fieldChart patterns222 readingsBy year198514 readings
All 64 readings tagged Head and shoulders
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2011Volume-confirmed head and shoulders on AIG and Citigroup in 20071989Volume-confirmed reversal patterns, stops, and measured objectives1999Construction first: extra shoulders, the neckline, and the diamond test2001Constructing a slanted head-and-shoulders when the chart is tilted2003A head-and-shoulders test during a bear rally