A worked example that explains the rule, not a stock price. The circle marks the first close beyond the level. The blue line is the target. The orange line is the invalidation. Prices are in the right-hand column, and sessions sit under the volume bar.Hollow green candles closed above their open, and filled red candles closed below it.
Numbers in the example chart
From the same calculation that draws the shape and writes the "Measuring the target" section below.
Trigger level
$420 · at the close of session 59
Target
380$
Invalidation
440$
Pattern height
40$
Chart span
70 sessions
What it is
Three consecutive tops, the middle one higher than its neighbors, with the lows on one line called the Neckline. The pattern describes an uptrend that lost its ability to make a higher high: buyers tried twice after the head and never reached it.
Left shoulderA natural rise inside an established uptrend, followed by ordinary profit-taking. Nothing warns yet.
HeadA higher peak on big volume · the last push buyers can make. Volume here is the highest in the pattern, and it is the peak of enthusiasm, not its start.
Right shoulderThe third attempt fails before reaching the head, and on lower volume. This is the real message: demand is spent, and those who wanted to buy have bought.
Neckline breakA close below the line joining the two lows. Only here does the pattern become a pattern; before that it is just three peaks.
Recognition rules
A clear uptrend before the left shoulder · with no prior trend, there is nothing to reverse.
The head is the highest peak, and the shoulders are close to each other in height.
The neckline joins the two lows beside the head and is horizontal or slightly sloped.
Volume shrinks from the left shoulder to the right · a sign that demand is spent.
The signal starts with a close below the neckline, not merely a touch of it.
Measuring the target
The head's height above the neckline is subtracted from the breakdown point: a neckline at $420 and a head at $460 ⇐ a target at $380.
Where it fools you
The pattern's best-known trap: the break and then the throwback to the neckline (Throwback) shakes out anyone who entered early with a tight stop. Worse is naming it on a chart with no prior uptrend · then it is a sideways swing, not a pattern.
Open the daily timeframe for any symbol and draw the pattern yourself. Your drawing is saved per symbol in your browser, and the terminal does not name or detect the pattern.
━ LevelNeckline
⇕ MeasureTarget equals pattern height
We do not detect chart patterns with a numeric rule: telling them apart takes judgment on the chart. Candlestick patterns with a numeric rule are detected daily by the candlestick pattern scanner.
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