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October 22, 2026FrançaisEspañol

Head and shoulders: what it is, and how to test it

A head and shoulders is three swing highs: a shoulder, a higher head, then a second shoulder at about the height of the first. It completes when price closes below the neckline, the lowest low between the shoulders. The inverse is the mirror image. Here is the exact rule QuantLogic uses.

NecklineheadComplete
The level the idea readsThe bar where the idea firesA drawn example, not market data.

What it is

The left shoulder and the head are two pushes up; the right shoulder is a third push that stops short of the head. The lows between them form the neckline.

The inverse head and shoulders, upside down, is three swing lows with the middle one lowest, completed by a close above the neckline.

The exact rule QuantLogic uses

Head and shoulders (completes downward). The inverse is the mirror image.

  1. Take the last three confirmed swing highs. The middle one, the head, is above both others by at least 10% of the average daily range (ATR).
  2. The two shoulders are within 15% of the ATR of each other.
  3. The neckline is the lowest confirmed swing low between the shoulders. This bar closes below it, and the bar before closed at or above it.

When is it known? Swings use 3 bars each side and are confirmed 3 bars after they print, so the pattern fires on the close through the neckline using only swings already known then.

Versions you can build

  • Head and shoulders completing. Three swing highs, middle highest, a close below the neckline.
  • Inverse head and shoulders completing. Three swing lows, middle lowest, a close above the neckline.

What to look at around it

In QuantLogic, every time the idea happened is laid out with the data points around it, so you can see where it held and where it didn't:

Time of day and sessionEconomic calendar and newsVWAP distanceGamma regime, flip and wallsYesterday's value area and pivotsVolatilityNQ vs ES since the openUp or down on the day

Traps when you test it

  • Seeing it before it completes. Three highs without the neckline break are not the pattern.
  • Picking the neckline after the fact. Here it is always the lowest swing low between the shoulders.
  • Testing only the top version. Check the inverse too.

Build it and test it yourself

Open Head and shoulders completing in Build with QuantLogic. See every time it happened on NQ, ES, Gold or Crude since September 2025, check the long and the short side, add your own filters and run the luck test.

Build this setupSee plans

Nothing is proven until it holds live. We give no trading signals and no advice, we never hold your money or your accounts, and we never trade for you.

Questions

How much higher does the head have to be?
At least 10% of the market's average daily range above both shoulders.
Does the neckline have to be flat?
No. QuantLogic uses the lowest swing low between the shoulders as one level.
Is a head and shoulders a sell signal?
No. It describes a shape. QuantLogic gives no signals; you test it and decide.

Related setups

Educational content, not investment advice. Futures trading involves substantial risk of loss. See the risk disclosure.