Definition of Head and Shoulders chart pattern

A chart pattern that indicates a reversal of a trend. A head and shoulders top indicates a reversal of an uptrend and is considered bearish. A head and shoulders bottom is the reversal of a downtrend and is considered bullish

Applying "Head and Shoulders chart pattern" to Securities Exams:

A head and shoulders chart pattern is a very strong chart formation that indicates a reversal of a trend. When a head and shoulders chart pattern in confirmed a 30 percent move from the neck line can generally be expected. Upon confirmation of a head and shoulders bottom a 30 percent move higher can be expected. Upon the confirmation of a head and shoulders top a 30 percent decline from the neckline can be expected.

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