Chart Patterns - Head and Shoulders

For confirmation, look for a close beneath the neckline as well as increased volume on the day it closes beaneath neckline.

Also check others in their sector. Is their sector showing weakness or strength? Weakness could help confirm the down movement.

Head and Shoulders

Head and shoulders is a reversal pattern that, when formed, signals the security is likely to move against the previous trend. There are two versions of the head-and-shoulders pattern. The head-and-shoulders top is a signal that a security's price is set to fall, once the pattern is complete, and is usually formed at the peak of an upward trend. The second version, the head-and-shoulders bottom (also known as inverse head and shoulders), signals that a security's price is set to rise and usually forms during a downward trend.