Head And Shoulders Pattern Definition
Head And Shoulders Pattern is a term used in technical analysis of stock prices. It describes a chart in which a stock's price rises to a peak and subsequently declines, then rises again, exceeds the former peak and declines, and finally, rises again, but does not reach the second peak, and declines once more.
The first and third peaks are shoulders, and the second peak is regarded as the head. This pattern is generally considered as a reversal pattern and it is most often seen in uptrends. It indicates that the market begins to slow down and supply and demand are in balance.