As of 08/20/2019
  Indus: 25,962 -173.35 -0.7%  
  Trans: 10,006 -75.35 -0.7%  
  Utils: 834 -1.95 -0.2%  
  Nasdaq: 7,949 -54.25 -0.7%  
  S&P 500: 2,901 -23.14 -0.8%  
YTD
 +11.3%  
 +9.1%  
 +17.0%  
 +19.8%  
 +15.7%  
  Targets    Overview: 08/15/2019  
  Up arrow27,200 or 24,900 by 09/01/2019
  Up arrow10,700 or 9,550 by 09/01/2019
  Up arrow850 or 790 by 09/01/2019
  Up arrow8,200 or 7,400 by 09/01/2019
  Up arrow3,000 or 2,750 by 09/01/2019
As of 08/20/2019
  Indus: 25,962 -173.35 -0.7%  
  Trans: 10,006 -75.35 -0.7%  
  Utils: 834 -1.95 -0.2%  
  Nasdaq: 7,949 -54.25 -0.7%  
  S&P 500: 2,901 -23.14 -0.8%  
YTD
 +11.3%  
 +9.1%  
 +17.0%  
 +19.8%  
 +15.7%  
  Targets    Overview: 08/15/2019  
  Up arrow27,200 or 24,900 by 09/01/2019
  Up arrow10,700 or 9,550 by 09/01/2019
  Up arrow850 or 790 by 09/01/2019
  Up arrow8,200 or 7,400 by 09/01/2019
  Up arrow3,000 or 2,750 by 09/01/2019

Bulkowski's Complex Head-and-Shoulders Top

 

Statistics updated on 11/16/2018.

For more information on this pattern, read Encyclopedia of Chart PatternsEncyclopedia of Chart Patterns 2nd Edition book., pictured on the right. The chapter gives a complete review of the chart pattern, compared to what is described below.

If you click on the above link and then buy the book (or anything) while at Amazon.com, the referral will help support this site. Thanks.

-- Tom Bulkowski

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Important Results
Identification Guidelines
Trading Tips
Example
Other Examples
See Also

Shows is a complex head-and-shoulders top

Complex Head-and-Shoulders Top

Complex Head-and-Shoulders Top: Important Bull Market Results

Overall performance rank (1 is best): 9 out of 53
Break even failure rate: 18%
Average decline: 17%
Pullback rate: 66%
Percentage meeting price target: 46%

The above numbers are based more than 600 perfect trades. See the glossary for definitions.

Complex Head-and-Shoulders Top: Identification Guidelines

CharacteristicDiscussion
Price trendUpward leading to the pattern.
ShapeA head-and-shoulders top with multiple shoulders or multiple heads, but rarely both.
SymmetryThe shoulders should peak near the same price, be nearly the same distance from the head, and look similar (both wide or both narrow peaks) compared to their mirror opposite.
VolumeUsually higher on the left side of the pattern.
NecklineJoins the lowest armpits and is often nearly horizontal. Rarely does it slope steeply.
ConfirmationThe pattern confirms as valid when price closes below an up-sloping neckline or below the right armpit when the neckline slopes downward.

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Complex Head-and-Shoulders Top: Trading Tips

Consult the associated figure on the right.

Trading TacticExplanation

The measure rule for complex head-and-shoulder top chart patterns

The Measure Rule

An inner set of head-and-shoulders top chart patterns

Inner Head & Shoulders

Measure ruleCompute the height from the highest head (A) to the neckline directly below (B) and then multiply it by the "percentage meeting price target" (see "Important Bull Market Results") before subtracting it from the breakout price (C). The breakout price is where price crosses an up-sloping neckline, or when the neckline slopes downward, use the right shoulder armpit. The figure to the right shows an example, but uses a head-and-shoulders top.
Price reversalPrice must have something to reverse, so if the rise leading to the pattern is small, expect a small decline.
ConfirmationWait for confirmation before placing a trade.
TrendsA short-term rise leading to the pattern results in the best post breakout performance.
Price velocityA high velocity rise leading to the pattern often results in a larger decline post breakout. The link to the left explores this.
Inner H&SIf the pattern shows an inner head-and-shoulders top, then trade it. The figure to the right shows an example.
NecklinePatterns with near horizontal necklines perform best.
Yearly middlePatterns in the lowest third of the yearly price range perform best (this may change with more study samples).
Volume trendAn upward volume trend suggests better post breakout performance. The link to the left defines this while this link explains performance.
PullbacksPullbacks hurt post breakout performance. The link to the left defines terms while this link explains performance details.
SymmetryPatterns with an extended right shoulder perform marginally better.

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Complex Head-and-Shoulders Top: Example

Adam & Adam double top chart pattern example

The figure on the right shows an example of a complex head-and-shoulders top chart pattern.

This example has two left shoulders (LS), and two right shoulders (RS). The blue neckline is not very steep but if you use that as the standard breakout method, where price closes below a down-sloping neckline, it will be at a lower price than if you use the right shoulder armpit low (the dashed red line). The neckline, incidentally, joins the lowest low (armpit) to the left of the head with the lowest low (armpit) to the right of the head.

Notice how price at B returns to the launch point, A. This often occurs when price moves up quickly leading to the chart pattern -- a decline takes price nearly back to the staring price.

-- Thomas Bulkowski

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Complex Head-and-Shoulders Top: Other Examples

See Also

 

Support this site! Clicking any of the books (below) takes you to Amazon.com. If you buy ANYTHING while there, they pay for the referral.

My novels:      New                  Bumper's Story Head's Law

Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Encyclopedia of Chart Patterns 2nd Edition Trading Classic Chart Patterns

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