Three peaks: a left shoulder, a higher head, and a lower right shoulder. Connect the lows between them and you have the neckline.
Why it works
The head is the last gasp of the uptrend. The right shoulder fails to make a new high: buyers are exhausted. The neckline break confirms sellers are in charge.
Trading it
- Entry: close below the neckline (or on a retest of it).
- Stop: above the right shoulder.
- Target: distance from head to neckline, projected down from the break.
Wick says
Yes, it really looks like a person. Some charts even have a hat. Those are just called "lucky".
Key takeaways
- Left shoulder, higher head, lower right shoulder.
- Neckline break confirms the reversal.
- Target = head-to-neckline height.