Price Patterns - Head and Shoulders Top Has Three Tops

The head and shoulders price pattern has three tops called the left shoulder, head and right shoulder. The neckline is the support level at the completion of the downside of each top. Prices break below the neckline for the right shoulder.

Sepracor (SEPR), a drug maker, formed a classic head and shoulders top from January 1998 through December 2002.

The percent returns chart shows the profitable buy and sell combinations in green and the unprofitable ones in red. For 8,515 buy and sell combinations based on weekly closes 4,061 (47.7%) were profitable and 4,454 (52.3%) were unprofitable.

The winners and losers map shows the profitable (green) and unprofitable (red) buy and sell combinations without any relief.

Related Articles:

Price Patterns - A Bubble Top Is an Extreme Pattern
Price Patterns - Bump and Run Reversal Top Defines Price Bubble
Price Patterns - A Double Top Signals a Downside
Price Patterns - Triple Top Signals End of Upside Move
Price Upsides Often Occur in Three Stages

Updated February 25, 2008.