A reversal pattern that generally will occur at the top of the market, and is known to be a Bearish signal. This pattern is formed by 3 peaks, with one, the highest being the head, occurring in the middle, surrounded by two shoulder peaks. The other two peaks should hit their highs and fall to the neck line. The neck line is usually a horizontal trend-line providing support for the entire pattern. Should this neck line be broken then this will confirm the head and shoulders pattern and there is a good chance that the security price will start a new downtrend. There are also Inverse Head & Shoulders Patterns- which are the same pattern upside down- it signals the bottom of a market. A breakout from an inverse head and shoulders is Bullish. Breaking out of a Head and Shoulders pattern or an Inverse Head and Shoulders Pattern will reverse a current trend and usually occurs with a measured move equal to the distance of the neck line to the top of the head.