Chart Patterns 101: Head & Shoulders and Double Tops/Bottoms

Beyond single candlesticks, traders also look at the broader shape a chart forms over many candles — certain shapes recur often enough to have well-known names and interpretations.

Head and shoulders

This pattern forms after an uptrend: price rises to a peak (left shoulder), pulls back, rises higher to a second peak (the head), pulls back again, then rises to a third peak roughly level with the first (right shoulder) before declining. It’s widely read as a bearish reversal signal, with the “neckline” (connecting the two pullback lows) as a key level — a break below it is often treated as confirmation.

Inverse head and shoulders

The mirror image, forming after a downtrend with three troughs instead of peaks. It’s read as a bullish reversal signal, with a break above the neckline treated as confirmation.

Double top

Price rises to a peak, pulls back, then rises again to a similar peak before failing to break higher and declining. The two roughly equal peaks suggest resistance holding firm twice in a row, often read as a bearish reversal signal.

Double bottom

The mirror image of a double top, with two roughly equal troughs suggesting support holding firm twice, often read as a bullish reversal signal.

Key takeaway

These patterns describe the shape of a broader price move, not a single candle — they’re generally considered more reliable when the pattern is clear and confirmed by a decisive break of the relevant level, rather than assumed while still forming.