The measuring formula for this price formation is the distance between the head and the neckline projected downward from the neckline. It follows that the deeper the pattern, the greater its bearish significance once it has been completed. Sometimes an Head and Shoulders (H&S) completion will be followed by a fairly extensive downtrend; at others, the negative effect of the pattern will be quickly cancelled by the completion of a base.

Often, traders will observe the formation of an Head and Shoulders (H&S) top and anticipate a breakdown. This is an incorrect tactic based on this evidence alone because it is not known until later whether the prevailing trend will continue or if a reversal signal will be given with a decisive break below the neckline. Many analysts, who forecast a bearish trend based on an incomplete Head and Shoulders (H&S) top. Remember, in technical analysis, the prevailing trend is assumed to be in force until the weight of the evidence proves otherwise. An incomplete Head and Shoulders (H&S) is not evidence, just a possible scenario.

Head and Shoulders (H&S) patterns can be formed in 10 to 15 minutes or take decades to develop. Generally speaking, the longer the period, the greater the amount of distribution that has taken place, and therefore the longer the ensuing bear trend is likely to be. The larger Head and Shoulders (H&S) formations are often very complex and comprise several smaller ones.