Head and shoulders pattern: structure, neckline, target

The three peaks

A left shoulder, then a higher central peak (the head), then a right shoulder roughly the height of the left. The neckline runs across the two troughs between them. The shape says: buyers tried three times to push higher, and the third attempt was weaker than the second.

The pattern is only meaningful in a clear uptrend. A head-and-shoulders forming inside a range is noise — there has to be a trend to reverse.

The neckline is everything

The pattern is not confirmed until price closes below the neckline on increased volume. Many traders front-run the break and get burned by failed patterns. The classic measured-move target is the distance from neckline to head, projected downward from the breakdown point.

An inverse head-and-shoulders is the mirror at a downtrend bottom. Same logic, opposite direction.

How Signodex uses it

Signodex's pattern detection flags head-and-shoulders formations across the chart window and explains the structure ("Right shoulder forming at the 50-day moving average; neckline is at $63,200"). The AI does not tell you to trade the breakdown — it names the pattern and explains the volume context.