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Head And Shoulders Pattern

Introduction​

TRN SHS

The head and shoulders chart pattern (shs) is a technical analysis pattern used to identify potential trend reversals in financial markets. It consists of three peaks, with the middle peak being the highest and the two outside peaks being slightly lower in height. The middle peak is referred to as the "head" and the two outside peaks are referred to as the "shoulders."

The pattern typically forms after an uptrend and is considered to be a bearish signal. Traders and analysts look for this pattern to signal a possible shift in the direction of the price trend. Once the price breaks below the neckline, which is a support level that connects the lows of the two shoulders, it is seen as confirmation of the pattern and the start of a downtrend.

Conversely, a "reverse head and shoulders" pattern forms after a downtrend and is considered to be a bullish signal. It consists of three troughs with the middle trough being the lowest and the two outside troughs being slightly higher in depth. The pattern is confirmed when the price breaks above the neckline, which is a resistance level that connects the highs of the two shoulders.

How To Setup Head And Shoulders Pattern

The indicator is designed to identify shoulder head shoulder patterns using two distinct swing sizes. By default, the first shs swing size is set to 10, and the second shs swing size is set to 25.

TRN Rectangle

To modify the swing size, navigate to the indicator settings (1) and adjust the shs size in the "Detection" section (2).

A larger shs size corresponds to the detection of larger patterns, while a smaller shs size results in the identification of smaller patterns by our indicator.