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Head and Shoulders

A technical pattern or chart formation where a stock’s price rises to a peak and subsequently declines. Then, price rises above the former peak making a higher high and again declines. Price then rises again, but not as high as the second peak and declines once more. These three peaks with the middle being the highest and lower highs on either side of it, create a pattern in the image of a silhouette of a head and shoulders where the first and third peaks are the shoulders and the second peak forms the head. The pattern is considered a bearish type of reversal. See also Inverted Head and Shoulders.