Head and Shoulders

What it is

A head and shoulders top has a left shoulder, a higher peak (the head) and a right shoulder at roughly the height of the left one. The neckline joins the two lows between the peaks.

The pattern is complete only after a candle closes below the neckline. Before that it is an unfinished structure, and many never complete.

How ClosedCandle detects it

• Five consecutive confirmed swing pivots: shoulder, neckline point, head, neckline point, shoulder. The swing before the left shoulder must start beyond both neckline points.
• The head is at least 0.5× ATR higher than both shoulders, and the two shoulders are within 1× ATR of each other.
• The neckline joins the two swing lows between the peaks; the pattern spans at most 200 candles.
• Confirmed when a candle closes beyond the neckline; invalidated by a close beyond the right shoulder (also the measured stop), or after 30 candles.
• Only closed candles are used; a wick through a line never counts. Once recorded, the detection is never changed.

Full methodology · how setups are measured.