📍 Entry / Short Zone
Neckline Break
Short on a candle close below the neckline connecting the two troughs.
🛑 Stop Loss
Above Right Shoulder
Place the stop just above the right shoulder's high.
🎯 Price Target
Neckline − Head Height
Measure from the head's peak down to the neckline, then project that distance below the breakdown.
⚖️ Risk / Reward
Aim for ≥ 2:1
Skip the setup unless the measured target is at least twice your risk to the stop.
Trading Rules — Head & Shoulders
01Three peaks. A higher middle peak (the head) flanked by two lower peaks (the shoulders) of roughly equal height.
02The neckline. Connect the two troughs between the peaks — that line is your trigger when broken.
03Wait for the close. A wick below the neckline is not enough; require a full candle close.
04Retest is common. Price often pulls back to the broken neckline (now resistance) — a second, lower-risk short.
05Volume clue. Volume is often lighter on the head and right shoulder than the left — fading momentum.
For educational purposes only. Not financial advice. Always manage risk with position sizing and never risk more than you can afford to lose.