An uptrend that is interrupted by a head and shoulders top pattern may experience a trend reversal, resulting in a downtrend. Conversely, a downtrend that results in a head and shoulders bottom (or an inverse head and shoulders) will likely experience a trend reversal to the upside. Investors typically enter into a long position when the price rises above the resistance of the neckline.
Left shoulder: Price declines followed by a price bottom, followed by an increase.
Head: Price declines again forming a lower bottom.
Right shoulder: Price increases once again, then declines to form the right bottom.
